Sunday, February 03, 2008

Celebrating India's Declining Poverty Levels!

About a year back, there was a flurry of articles celebrating the post-reforms/liberalisation decline of poverty levels in India.

Govt of India's press release concluded based on NSS (National Sample Survey) 61st round that, from a poverty level of 36% in 1993-94, by 2004-05:

  • the poverty levels had fallen to 27.5% (if one goes by Uniform Recall Period (URP) consumption distribution methodology)
  • the poverty levels had fallen to 21.8% (if one goes by Mixed Recall Period (MRP) consumption distribution methodology)

    One news report noted:

    "The National Democratic Alliance (NDA) Government may have been voted out of office in 2004 as its "India Shining" campaign boomeranged, but official data now available shows that more people moved above the poverty line by 2004-05 compared with the earlier estimates of 1999-2000.

    As per the provisional data of the 61st round of large sample survey on household consumer expenditure, the poverty ratio at the national level was about 22 per cent in 2004-05, down from the roughly comparable data for 1999-2000 which showed a poverty level of 26.1 per cent for that year."

    This, to say the least, is a great achievement!
    (for a country with the population like India, bringing 4-6% of populace above poverty line in such a short period is equivalent to bringing almost the entire population of countries like UK or France above the poverty line)

    ... Till one starts looking at the "definition of poverty" in India:

    The NSS data divides "the poor" into six groups:

    1. Extremely Poor/BPL whose average per capita consumption income is Rs.9/day

    2. Above the Poverty Line, earning is upto Rs.12/ day

    3. The Marginally Poor earning Rs upto Rs.15/day

    4. The Vulnerable, earning above Rs 15 but less than Rs.20/day

    5. The Middle Income earning Rs.37/day, and

    6. The High Income, earning above Rs.93/day.
    ($1 = Rs. 40/- approx)


  • if you earn more than Rs. 13/day, officially, you are above the poverty line

  • india's poverty "declined" when the per capita consumption of 43mn people grew from Rs.9/day to more than Rs.13/day

    Meanwhile... 836 million people in India live on a per capita consumption of less than Rs.20/day!!


    Divyakant said...

    The government has got its basics so wrong. Rs.13/day and you're above the poverty line. Brilliant!! Thanks for enlightening me Sir.
    I sincerely wish the government and the policy makers pay homage to Mr. Common Sense someday soon.

    Anirudh Patil said...

    Thanks for the enlightening post..
    Can someone help me get details about the moethodology of Uniform recall period and mixed recall period?

    Madhukar said...

    to the best of my knowledge, in Uniform Recall Period, the income level is estimated based on the recall of consumption of all items within last 30 day.

    MRP is calculated by the value of 5 non-food items (clothes, footwear, durable goods, educational expenses and medical expenses) during last one year, and the value of the other items consumed during last 30 days.

    Anirudh Patil said...

    Thanks for the quick reply. I am currently trying to read a lot on Indian poverty. I found the book "Everybody loves a good drought" quite insightful. Many of the articles on poverty keep talking about URP and MRP. However, I was not able to clearly find out the difference.

    Anonymous said...

    excellent news, this is a cleary signal that econmic situation is going better in poor countries like India, maybe the Generic Viagra plan finally work, anyway with news like this anyone feel happy the rest of the day.

    Psycho said...

    The economic situation around the globe is a disaster, rich getting richer and the poor just barely surviving, so unfair.