New Delhi, March 2: India has officially eradicated ‘extreme poverty,’ as highlighted in a comprehensive report by the American think tank Brookings. Authored by Surjit Bhalla and Karan Bhasin, the report underscores the significant reduction in the headcount poverty ratio and a substantial surge in household consumption, attributing this success to the government’s robust policy focus on redistribution over the past decade.
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Government Policies Drive Inclusive Growth and Poverty Alleviation
The report emphasizes the critical role of government policies in fostering inclusive growth. India recently released its official consumption expenditure data for 2022-23, offering the first survey-based destitution estimates in over ten years. Real per capita consumption growth, averaging 2.9% annually since 2011-12, reveals a rural-urban disparity with rural growth at 3.1% compared to urban growth at 2.6%.
The data further illustrates an unprecedented decline in both urban and rural inequality, with the Gini index witnessing a substantial drop. Urban Gini decreased from 36.7 to 31.9, while rural Gini declined from 28.7 to 27.0. This decline in inequality, coupled with high economic growth, has played a pivotal role in eliminating destitution in India, specifically for the Purchasing Power Parity USD 1.9 poverty line.
Striking Decline in Destitution Ratios
The Headcount Poverty Ratio (HCR) for the 2011 PPP USD 1.9 poverty line has witnessed a remarkable decline from 12.2% in 2011-12 to 2% in 2022-23, equivalent to an annual reduction of 0.93 percentage points. Rural poverty now stands at 2.5%, while urban poverty has dropped to 1%. For the PPP USD 3.2 line, HCR has declined from 53.6% to 20.8%.
However, it’s important to note that these estimates exclude the impact of free government-supplied food (wheat and rice) to two-thirds of the population, as well as the utilization of public health and education services.
Policy Initiatives Propel Consumption Growth in Rural Areas
The report attributes the relatively higher consumption growth in rural areas to the government’s redistributive policies, including the national mission for toilet construction, efforts to ensure universal access to electricity, modern cooking fuel, and piped water. The rural access to piped water has seen a substantial increase from 16.8% in August 2019 to 74.7%, potentially contributing to reduced sickness and increased family income.
The Aspirational District Programme, targeting 112 districts with the lowest development indicators, has further driven government policies with a specific focus on improving their performance in development.
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Time for India to Redefine Social Protection Programs
The authors of the Brookings report commend India’s achievement in eliminating destitution, urging the country to transition to a higher poverty line in line with global standards. They emphasize the need to redefine existing social protection programs, aiming for better identification of beneficiaries and providing enhanced support to the genuinely impoverished.
In conclusion, the official confirmation of India’s elimination of destitution marks a momentous milestone, with far-reaching implications for global poverty rates. As India considers redefining its poverty line, the success of inclusive growth and targeted policy interventions offers a blueprint for other nations grappling with poverty alleviation.
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