World Bank's Poverty and Equity Brief on India

The World Bank's Poverty and Equity Brief on India provides a nuanced view of the socio-economic situation, highlighting both positive developments in poverty reduction and ongoing challenges related to inequality and data reliability.

Key Findings:

1. Decline in Extreme Poverty:

   • Extreme poverty (living on less than $2.15/day in 2017 PPP terms) fell from 16.2% in 2011-12 to 2.3% in 2022-23, lifting 171 million people out of poverty.

   • Rural poverty declined from 18.4% to 2.8%, while urban poverty fell from 10.7% to 1.1%, suggesting a narrowing of the rural-urban divide in extreme poverty.

2. Lower-Middle-Income Poverty Line:

   • The World Bank introduces a broader poverty measure at $3.65/day (PPP terms), reflecting challenges in low- and middle-income countries.

   • Under this threshold, poverty fell from 61.8% to 28.1%, lifting 378 million people out of poverty.

   • Rural poverty dropped from 69% to 32.5%, and urban poverty fell from 43.5% to 17.2%, further reducing the rural-urban gap.

3. Regional Contributions:

   • Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh — five populous states — accounted for 65% of India's extreme poor in 2011-12. These states contributed to two-thirds of the overall decline in poverty by 2022-23.

4. Inequality Trends:

   • The consumption-based Gini index improved from 28.8 in 2011-12 to 25.5 in 2022-23, indicating reduced inequality. However, income-based inequality remains high, with the top 10% earning 13 times more than the bottom 10%.

5. Employment Growth:

   • Employment growth outpaced the working-age population since 2021-22, with rising employment rates among women.

   • Urban unemployment fell to 6.6% in Q1 FY24/25, the lowest since 2017-18.

Challenges Highlighted by the World Bank:

1. Income & Gender Disparities:

   • The income gap remains substantial, with the top 10% earning 13 times more than the bottom 10% in 2023-24.

   • Gender disparities persist, with 234 million more men in paid work than women, highlighting the need for greater gender equality in the labor market.

2. Youth Unemployment:

   • Youth unemployment remains high at 13.3%, with an alarming 29% unemployment rate among tertiary education graduates, indicating a mismatch between education and job market demands.

3. Urban-Rural Divide:

   • While the rural-urban income gap has narrowed from 84% in 2011-12 to 70% in 2023-24, disparities in access to resources and opportunities remain significant, particularly in education, healthcare, and infrastructure.

4. Migration Data Inconsistencies:

   • Migration trends are inconsistent. While there has been a reported shift of male workers from rural to urban areas since 2018-19, the Periodic Labour Force Survey (PLFS) data shows an increase in agricultural employment, creating conflicting trends.

   • A 2024 study by the Economic Advisory Council found a decline in rural-to-urban migration, which requires closer examination for more accurate conclusions.

Key Factors Behind the Decline in Extreme Poverty:

1. Revised Methodology (HCESs):

   • The decline in extreme poverty is captured by the revised methodology of Household Consumer Expenditure Surveys (HCESs) for 2022-23 and 2023-24, providing a clearer and more granular understanding of consumption patterns.

2. Food Security Schemes:

   • Programs like the Public Distribution System (PDS), which distributes food grains to 80 crore people, have played a pivotal role in ensuring basic survival needs, thereby helping reduce extreme poverty significantly.

3. Direct Benefit Transfers (DBTs):

   • Government initiatives like Jan Dhan Yojana and PM Kisan Samman Nidhi Yojana have provided financial support to vulnerable populations, contributing to the poverty decline.

Other Flagship Initiatives for Poverty Alleviation:

1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

   • Provides 100 days of guaranteed wage employment annually to rural households, boosting the livelihood resource base of marginalized communities.

2. Mission Antyodaya:

   • A framework designed to optimize resources allocated by 26 ministries for rural development, focusing on Gram Panchayats as implementation centers.

3. Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM):

   • Empowers rural women through community institutions and facilitates access to various government schemes like Swachh Bharat Mission and Poshan Abhiyan.

4. Pradhan Mantri Awas Yojana – Gramin (PMAY-G):

   • Aims to provide housing for the poorest segments of society, ensuring aid reaches deserving individuals through a three-stage validation process.

5. Pradhan Mantri Gram Sadak Yojana (PMGSY):

   • Aims to provide connectivity to unconnected habitations, ensuring high technical and management standards for rural road networks.

6. Multidimensional Poverty Reduction:

   • Multidimensional poverty in India has dropped from 29.17% in 2013-14 to 11.28% in 2022-23, lifting 24.82 crore people out of poverty. The National Multidimensional Poverty Index (MPI) assesses deprivation in areas such as health, education, and living standards.

Conclusion:

India's remarkable reduction in extreme poverty demonstrates the effectiveness of targeted government programs like food security schemes and direct benefit transfers. However, the continued economic inequality, gender disparities, and inconsistent data call for ongoing efforts to address these persistent challenges. Ensuring inclusive development through effective policy implementation and equitable access to resources will be crucial as India works toward a more equitable and sustainable future.