There Is No Debate: There Has Been a Persistent Decline in Poverty in India

Why in news?

• The recent release of the NFHS -5 data for 2019-21 allows for a detailed analysis of the progress in the reduction of absolute poverty and related determinants like nutrition.
• The article reflects upon the relative decline in poverty between periods of 2004-2013 and 2014-2021 and argues that India’s economic growth had been the most inclusive between 2014 and 2019.

 

Demonstration of declined poverty

• The two time periods under examination in the article, i.e. 2005 to 2011 (P-1) and 2011 to 2021 (P-2) are separated by per capita income growth declining in the world (2.8 to 2.2 per cent) and in India (from 6.3 to 4.4 per cent).

 

About National Family Health Survey (NFHS)

• Description: It is a large-scale, multi-round survey conducted in a representative sample of households throughout India.
  • The NFHS surveys are part of a multinational attempt to provide estimates of a multidimensional poverty index.
• Calculation: Its computation rests on estimates of poverty according to 10 different indicators (see table).
  • The deprivation index for each indicator is the per cent poor (deprived) according to that indicator and the aggregation of the 10 indicators into one index involves legitimate issues of weighting.

Poverty facts from 2005 to 2011 (P-1) and 2011 to 2021 (P-2)

• Poverty downturn: NFHS estimates put emphasis that poverty fell sharply after 2011 based on these two period i.e. P-1 to P-2 as depicted below:
• Depiction: Multidimensional poverty declined at a compounded annual average rate of 4.8 per cent per year in P-1 and more than double that pace at 10.3 per cent a year during P-2.
  • The average equally weighted decline for nine indicators was 1.9 per cent per annum in P-1 and a rate of 6 per cent per annum, more than eight times higher in P-2.
  • This unambiguous and strong conclusion however needs further investigation that what made growth so inclusive in P-2.
• Bolstering reveals: Also the Demographic and Health Surveys (DHS) nutrition index improved at a 2.5 per cent rate during 2005-11 and at a more than five times faster rate during 2020-11.
  • About DHS: The DHS are nationally-representative household surveys that provide data for a wide range of monitoring and impact evaluation indicators in the areas of population, health, and nutrition.
  • A similar improvement is found in nutrition deprivation, which registered a CAGR decline of 11.6 per cent from 2015 onward.
• Contrasting findings: On other hand, the Global Hunger Index (GHI) released recently depicted a worsening of hunger in India between 2014 and 2021, and hence contradicts the large improvement documented in the NFHS data.
  • It ranked India 107 out of 123 countries, dropping from the rank of 101 in 2021 and put it in “serious” category and behind all south Asian countries except the war-torn Afghanistan.
  • However, unlike the GHI, the NFHS provides comparative state-level data, including the main pointers that determine health and nutrition.

 

A perspective on inclusive growth

• Fall in Consumption inequality: Every single household survey or analysis has shown that consumption inequality declined during 2011 to 2021 (P-2).
  • As per a recently published International Monetary Fund (IMF) working paper, consumption inequality in India during pandemic (2020-21) fell near its lowest level in 40 years, primarily because of free food supply to 800 million people.
• Underlying reasons for inclusive nature of growth during P-2: The focus of government policies on each of the individual indicators indicative of a dignified standard of living and sharp departure from the “entitlements”-based approach followed between 2004-13stepped up inclusive growth.
  • Also, the proactive use of fiscal policy combined with effective targeting.

 

Demonstration of inclusive growth

• Access to toilets : The current government’s Swachh Bharat mission in P-2 constructed over 110 million toilets.
• Access to electricity: Close to one-third of Indians were deprived of electricity till as recently as 2014. However, after a dedicated push of Saubhagya Yojana, India managed to electrify every village, and eventually households.
  • Electricity deprivation declined by a 28.2 per cent rate post-2014, but from 2005-2011 (P-1), the rate of decline was close to zero.
• Financial inclusion: Jan Dhan Yojana, providing basic banking facilities to the underprivileged, made financial inclusion a reality in India, especially for women.
  • It presently has in excess of 472 million accounts with deposits in excess of ₹1.75 lakh crore.
• Access to modern cooking fuel: Through the Ujjwala Yojana, deprivation was nearly halved from 26 per cent to 14 per cent in just five years. The previous halving (2005/6 to 2015/16) took 10 years.
• Affordable housing scheme: Under Awas Yojana, less than 14 per cent are now deprived, compared to thrice that number in 2011/12.
• Clean water: More recently, after 2019, India has embarked on an ambitious project of ensuring universal access to piped water under the Jal Jeevan Mission.
  • Rural piped water coverage was a little less than 17 per cent in 2019, but is now well above 54 per cent and expected to at least be near, if not meet, the 100 per cent target by 2024.

 

Conclusion

• The policy-makers and academics have given a higher priority to the poverty-reducing properties of inclusive growth rather than growth per se. Given the estimated poverty decline in India, time has come to change our economic policies; concentrate on what causes growth, not what causes poverty to decline.
• Poverty is now not just about food but living standards like sanitation, housing, piped water, electricity, education, health, and jobs. And on each of these elements, the focus should shift to quality, not quantity.