Is poverty being underestimated in India?
News:
Recently, the government released the 2023-24 Household Consumption Expenditure Survey (HCES), showing a decline in poverty levels across urban and rural areas. However, the debate over the accuracy of data, the definition of poverty, and the adequacy of the consumption basket continues to raise questions. Is poverty in India being underestimated despite these claims?
Arguments In Favor of Poverty is being underestimated in India:
Inaccurate Measurement of Poverty Line
The poverty line in India is based primarily on income and consumption levels, but it doesn’t consider important factors such as regional cost of living and inflation. The thresholds for poverty do not account for urban areas where the cost of essential services is rising rapidly, leading to a significant underestimation of poverty.- Example: The Rath Committee Report (2009) highlighted that the official poverty line is outdated and does not adequately reflect the real living conditions of people, especially in urban centers.
Ignoring the Informal Sector
A large proportion of India’s population works in the informal sector, where income is unstable and unreported. These workers are not included in official poverty data, causing an underrepresentation of the actual poverty levels in the country.- Example: According to the International Labour Organization (ILO), over 90% of India’s workforce is informal, yet these workers face precarious conditions that are not captured in poverty statistics.
Inadequate Focus on Non-Monetary Poverty Indicators
Poverty is not solely defined by income but also by access to essential services like healthcare, education, and sanitation. The traditional poverty measure often overlooks these critical components, meaning poverty is underestimated as it neglects these aspects of deprivation.- Example: A report by UNICEF highlighted that child poverty is not just about income but also about access to education and healthcare, which are often neglected in poverty assessments.
Limited Consideration of Regional Disparities
Poverty measurements in India are based on national averages, which fail to account for the stark regional disparities across the country. States like Bihar and Odisha experience higher levels of deprivation than the national poverty line reflects.- Example: The NITI Aayog report on multidimensional poverty showed that states like Odisha have poverty rates much higher than national statistics suggest, revealing the limitations of a one-size-fits-all poverty line.
Impact of Climate Change and Natural Disasters
Climate change and frequent natural disasters worsen poverty in many parts of India. These events disproportionately affect the poor, pushing them further into deprivation, but such factors are not considered in regular poverty assessments, leading to underestimation.- Example: The National Disaster Management Authority (NDMA) has documented how natural disasters, such as the Kerala floods, exacerbate poverty in vulnerable communities, a factor often ignored in official statistics.
Poverty Traps in Rural Areas
In rural areas, poverty is often cyclical, with families unable to escape due to limited access to education, healthcare, and economic opportunities. The persistence of these conditions is not adequately reflected in poverty measurements, leading to an underestimation of the problem.- Example: A study by The Institute for Human Development (IHD) found that rural poverty in India is often entrenched by lack of access to capital, education, and jobs, which is not captured in traditional poverty statistics.
Underreporting by Low-Income Households
Many poor households underreport their income, either due to fear of taxation or lack of awareness about their rights. This leads to a significant gap in income data, further underestimating the extent of poverty in India.- Example: A study by the Indian Statistical Institute (ISI) found that underreporting of income in rural and urban areas among low-income households significantly skews poverty data.
Arguments Against Poverty is not being underestimated in India:
Comprehensive National Surveys
India conducts thorough and regular surveys to measure poverty, such as the National Sample Survey (NSS) and Periodic Labour Force Survey (PLFS). These surveys provide an accurate picture of poverty levels across various socioeconomic and demographic groups in the country.- Example: NSS and PLFS have been instrumental in shaping India’s policies and poverty alleviation programs, providing a robust dataset on income, expenditure, and employment.
Well-Defined Poverty Lines and Thresholds
The poverty line in India is periodically revised to account for inflation, changes in the cost of living, and the socioeconomic realities of the time. This ensures that poverty assessments remain relevant and reflect contemporary conditions.- Example: The Planning Commission has regularly updated the poverty line to reflect inflation rates and regional cost-of-living adjustments, ensuring that it remains a valid measure.
Poverty Measurement Aligned with International Standards
India’s poverty assessments are aligned with global standards set by institutions like the World Bank and the United Nations. These assessments ensure that India’s poverty levels are not underestimated when compared to international benchmarks.- Example: A World Bank report on poverty found that India’s poverty estimates are comparable to global standards, showing that the data is not significantly skewed or underestimated.
Government Poverty Alleviation Programs
The Indian government has implemented wide-ranging poverty alleviation programs, such as MGNREGA and PMAY, targeting the most vulnerable populations. These programs rely on accurate poverty data and have contributed to significant reductions in poverty.- Example: The MGNREGA scheme, which has provided rural employment to millions, reflects India’s commitment to addressing poverty through targeted, data-driven interventions.
Inclusion of Multiple Indicators in Poverty Measurement
Modern poverty measures in India, such as the Multidimensional Poverty Index (MPI), consider various factors beyond income, including education, health, and living standards. This ensures a more comprehensive understanding of poverty.- Example: The MPI developed by NITI Aayog includes factors like education, sanitation, and housing, which provide a more nuanced understanding of poverty.
Declining Poverty Rates Over Time
India has made significant progress in reducing poverty over the past few decades. The percentage of people living below the poverty line has reduced substantially, indicating that poverty measurements are accurate and the problem is being addressed.- Example: According to the World Bank, India’s poverty rate declined from around 45% in 1994 to under 20% in 2020, highlighting the success of poverty reduction programs.
Accurate Data in Recent Census and Surveys
The Census of India and various government surveys, such as the Economic Census, provide detailed and accurate data about income, employment, and social indicators. These surveys are comprehensive and reliable in capturing poverty levels.- Example: The Economic Census of 2016 provided detailed data on the informal sector, which helps to refine poverty estimates and improve the accuracy of poverty assessments.
Conclusion:
The debate on poverty measurement in India highlights gaps such as the exclusion of the informal sector and regional disparities, which may lead to an underestimation of poverty. However, regular surveys, updated poverty lines, and targeted government programs demonstrate that poverty is being accurately tracked and addressed, despite ongoing challenges.
