Poverty is a significant issue in India, despite being one of the fastest-growing economies in the world, clocked at a growth rate of 7.11% in 2015, and a sizable consumer economy. The World Bank reviewed and proposed revisions on May 2014 to its poverty calculation methodology and purchasing power parity basis for measuring poverty worldwide. According to this revised methodology, the world had 872.3 million people below the new poverty line, Nigeria, and Congo is expected to overtake India by the end of 2019. As of 2014, 58% of the total population were living on less than $3.10 per day.[1] According to the Modified Mixed Reference Period (MMRP) concept proposed by World Bank in 2015, India's poverty rate for period 2011-12 stood at 12.4% of the total population, or about 172 million people; taking the revised poverty line as $1.90.
The World Bank has been revising its definition and benchmarks to measure up poverty since 1990, with a $2 per day income on purchasing power parity basis as the definition in use from 2005 to 2013.[5] Some semi-economic and non-economic indices have also been proposed to measure poverty in India; for example, the Multi-dimensional Poverty Index placed 33% weight on number of years spent in school and education and 6.25% weight on financial condition of a person, in order to determine if that a person is poor.
The different definitions and different underlying small sample surveys used to determine poverty in India, have resulted in widely different estimates of poverty from 1950s to 2010s. In 2012, the Indian government stated 22% of its population is below its official poverty limit.[7] The World Bank, in 2011 based on 2005's PPPs International Comparison Program,[8] estimated 23.6% of Indian population, or about 276 million people, lived below $1.25 per day on purchasing power parity.[9][10] According to United Nation's Millennium Development Goals (MDG) programme 270 millions or 21.9% people out of 1.2 billion of Indians lived below poverty line of $1.25 in 2011-2012.
From late 19th century through early 20th century, under British colonial rule, poverty in India intensified, peaking in the 1920s.[12][13] Famines and diseases killed millions each time.[14][15] After India gained its independence in 1947, mass deaths from famines were prevented. Rapid economic growth since 1991, has led to sharp reductions in extreme poverties in India.[16][17] However, those above poverty line live a fragile economic life.
As per the methodology of the Suresh Tendulkar Committee report, the population below the poverty line in India in 2009-2010 was 354 million (29.6% of the population) and that in 2011-2012 was 269 million (21.9% of the population).[19] The Rangarajan Committee said in 2014 that the population below the poverty line in 2009-2010 was 454 million (38.2% of the population) and that in 2011-2012 was 363 million (29.5% of the population).[20] Deutsche Bank Research estimated that there are nearly 300 million people who are middle class.[21] If former trends continue, India's share of world GDP will significantly increase from 7.3% in 2016 to 8.5% by 2020.[22] In 2015, around 170 million people, or 12.4%, lived in poverty (defined as $1.90 (Rs 123.5)), a reduction from 29.8% in 2009.
The Asian Development Bank estimates India's population to be at 1.28 billion with an average growth rate, from 2010-2015, at 1.3%. In 2014, 49.9% of the population aged 15 years and above were employed. However, there are still 21.9% of the population who live below the national poverty line.[25] The World Poverty Clock shows real-time poverty trends in India, which are based on the latest data, of the World Bank, among others.
From November 2017, the World Bank started reporting poverty rates for all countries using two new international poverty lines: a "lower middle-income" line set at $3.20 per day and an "upper middle-income" line set at $5.50 per day. India falls in the lower middle-income category. Using the $3.20 per day poverty line, the percentage of the population living in poverty in India was 60% (2011). This means that 763 million people in India were living below this poverty line in 2011.
Poverty prevalence and estimatesThe 19th century and early 20th century saw increasing poverty in India during the colonial era. Over this period, the colonial government de-industrialized India by reducing garments and other finished products manufacturing by artisans in India, importing these from Britain's expanding industry with 19th century industrial innovations, while simultaneously encouraging conversion of more land into farms, and of agricultural exports from India.
Eastern regions of India along the Ganges river plains, such as those now known as eastern Uttar Pradesh, Bihar, Jharkhand and West Bengal, were dedicated to producing poppy and opium, which were then exported to southeast and east Asia particularly China, with the trade an exclusive monopoly first of East India Company, and later the colonial British institutions. The economic importance of this shift from industry to agriculture in India was large by 1850, it created nearly 1,000 square kilometres of poppy farms in India in its fertile Ganges plains, led to two opium wars in Asia, with the second opium war fought between 1856 and 1860. After China accepted opium trade, the colonial government dedicated more land exclusively to poppy, the opium agriculture in India rose from 1850 through 1900, when over 500,000 acres of the most fertile Ganges basin farms were devoted to poppy cultivation, opium processing factories owned by colonial officials were expanded in Benares and Patna, and shipping expanded from Bengal to the ports of East Asia such as Hong Kong, all under exclusive monopoly of the British. By early 20th century, 3 out of 4 Indians were employed in agriculture, famines were common, and food consumption per capita declined in every decade. In London, the late 19th century British parliament debated the repeated incidence of famines in India, and the impoverishment of Indians due to this diversion of agriculture land from growing food staples to growing poppy for opium export under orders of the colonial British empire.
These colonial policies moved unemployed artisans into farming, and transformed India as a region increasingly abundant in land, unskilled labour and low productivity, and scarce in skilled labour, capital and knowledge. On an inflation adjusted 1973 Rupee basis, the average income of Indian agrarian labourer was Rs. 7.20 per year in 1885, against an inflation adjusted poverty line of Rs. 23.90 per year. Thus, not only was the average income below poverty line, the intensity of poverty was severe. The intensity of poverty increased from 1885 to 1921, then began a reversal. However, the absolute poverty rates continued to be very high through the 1930s. The colonial policies on taxation and its recognition of land ownership claims of zamindars and mansabdars, or Mughal era nobility, made a minority of families wealthy, while it weakened the ability of poorer peasants to command land and credit. The resulting rising landlessness and stagnant real wages intensified poverty.
The National Planning Committee of 1936 noted the appalling poverty of undivided India.
(...) there was lack of food, of clothing, of housing and of every other essential requirement of human existence... the development policy objective should be to get rid of the appalling poverty of the people.
— Nehru, The Discovery of India, (1946)
The National Planning Committee, notes Suryanarayana, then defined goals in 1936 to alleviate poverty by setting targets in terms of nutrition (2400 to 2800 calories per adult worker), clothing (30 yards per capita per annum) and housing (100 sq. ft per capita). This method of linking poverty as a function of nutrition, clothing and housing continued in India after it became independent from British colonial empire.
These poverty alleviation goals were theoretical, with administrative powers resident in the British Empire. Poverty ravaged India. In 1943, for example, despite rising agricultural output in undivided South Asia, the Bengal famine killed millions of Indians from starvation, disease and destitution. Destitution was so intense in Bengal, Bihar, eastern Uttar Pradesh, Jharkhand and Orissa, that entire families and villages were "wiped out" of existence. Village artisans, along with sustenance farming families, died from lack of food, malnutrition and a wave of diseases. The 1943 famine was not an isolated tragedy. Devastating famines impoverished India every 5 to 8 years in late 19th century and the first half of 20th century. Between 6.1 and 10.3 million people starved to death in British India during the 1876-1879 famine, while another 6.1 to 8.4 million people died during 1896-1898 famine. The Lancet reported 19 million died from starvation and consequences of extreme poverty in British India, between 1896 and 1900.Sir MacDonnell observed the suffering and poverty in 1900, and noted, "people died like flies" in Bombay.
After Independence
1950Minhas published his estimates of poverty rates in 1950s India as cyclical and a strong function of each year's harvest. Minhas disagreed with the practice of using calories as the basis for poverty estimation and proposed a poverty line based on real expenditure per year (Rs 240 per annum). In 1956-57, a good harvest year, he computed India's poverty rate to be 65% (215 million people). For 1960, Minhas estimated the poverty to be 59%.
1960sA Working Group was formed in 1962 to attempt to set a poverty line for India. This Working Group used calories required for survival, and income needed to buy those calories in different parts of rural India, to derive an average poverty line of Rs. 20 per month at 1960-61 prices.
Estimates of poverty in India during the 1960s varied widely. Dandekar and Rath, on the behalf of then Indian government, estimated that the poverty rate in 1960s remained generally constant at 41%. Ojha, in contrast, estimated that there were 190 million people (44%) in India below official poverty limit in 1961, and that this below-poverty line number increased to 289 million people (70%) in 1967. Bardhan also concluded that Indian poverty rates increased through the 1960s, reaching a high of 54%.Those above the 1960s poverty level of Rs 240 per year, were in fragile economic groups as well and not doing well either. Minhas estimated that 95% of India's people lived on Rs 458 per year in 1963-64, while the richest 5% lived on an average of Rs 645 per year (all numbers inflation adjusted to 1960-61 Rupee).
1970s - 1980sDandekar and Rath in 1971 used a daily intake of 2,250 calories per person to define the poverty line for India. Using NSSO data regarding household expenditures for 1960–61, they determined that in order to achieve this food intake and other daily necessities, a rural dweller required an annual income of ₹ 170.80 per year (₹ 14.20 per month, adjusted to 1971 Rupee). An urban dweller required ₹ 271.70 per year (₹ 22.60 per month). They concluded from this study that 40 percent of rural residents and 50 percent of urban residents were below the poverty line in 1960–61.
Poverty alleviation has been a driver for India's Planning Commission's Task Force on Projections of Minimum Needs and Effective Consumption Demand of the Perspective Planning Division. This division, in 1979, took into account differences in calorie requirements for different age groups, activity levels, and sex. They determined that the average rural dweller needed around 2400 calories, and those in urban areas required about 2100 calories per person per day. To satisfy the food requirement, the Task Force estimated that a consumer spending in 1973–74 of Rs.49.09 per person per month in rural areas and Rs.56.64 in urban areas was appropriate measure to estimate its poverty line.
Poverty remained stubbornly high in India through the 1970s and 1980s. It created slogans such as Garibi Hatao (meaning eliminate poverty) for political campaigns, during elections in early 1970s through the 1980s. Rural poverty rate exceeded 50%, using India's official poverty line for 1970s.
1990sAnother Expert Group was instituted in 1993, chaired by Lakdawala, to examine poverty line for India. It recommended that regional economic differences are large enough that poverty lines should be calculated for each state. From then on, a standard list of commodities were drawn up and priced in each state of the nation, using 1973–74 as a base year. This basket of goods could then be re-priced each year and comparisons made between regions. The Government of India began using a modified version of this method of calculating the poverty line in India.
There are wide variations in India's poverty estimates for 1990s, in part from differences in the methodology and in the small sample surveys they poll for the underlying data. A 2007 report for example, using data for late 1990s, stated that 77% of Indians lived on less than ₹ 20 a day (about US$0.50 per day). In contrast, S.G.Datt estimated India's national poverty rate to be 35% in 1994, at India's then official poverty line of Rs 49 per capita, with consumer price index adjusted to June 1974 rural prices.
2000s
The Saxena Committee report, using data from 1972 to 2000, separated calorific intake apart from nominal income in its economic analysis of poverty in India, and then stated that 50% of Indians lived below the poverty line.[82] The Planning Commission of India, in contrast, determined that the poverty rate was 39%.
The National Council of Applied Economic Research estimated that 48% of the Indian households earn more than ₹90,000 (US$1,253.40) annually (or more than US$ 3 PPP per person). According to NCAER, in 2009, of the 222 million households in India, the absolutely poor households (annual incomes below ₹45,000 (US$630)) accounted for only 15.6% of them or about 35 million (about 200 million Indians). Another 80 million households are in the income levels of ₹45,000 (US$630) to ₹90,000 (US$1,300) per year. These numbers are similar to World Bank estimates of the "below-the-poverty-line" households that may total about 100 million (or about 456 million individuals).
The Suresh Tendulkar Committee set up to look into the people living under the poverty line in India submitted its report in November 2009.[84] It provided a new method of calculating the poverty line based on per capita consumption expenditure per month or day. For rural areas, it was Rs 816 per month or Rs 27 per day. For urban areas, it was Rs 1000 per month or Rs 33 per day. Using this methodology, the population below the poverty line in 2009-2010 was 354 million (29.6% of the population) and that in 2011-2012 was 269 million (21.9% of the population).
2010sThe World Bank has reviewed its poverty definition and calculation methodologies several times over the last 25 years. In early 1990s, The World Bank anchored absolute poverty line as $1 per day. This was revised in 1993, and the absolute poverty line was set at $1.08 a day for all countries on a purchasing power parity (PPP) basis, after adjusting for inflation to the 1993 US dollar. In 2005, after extensive studies of cost of living across the world, The World Bank raised the measure for global poverty line to reflect the observed higher cost of living. Thereafter, the World Bank determined poverty rates from those living on less than US$1.25 per day on 2005 PPP basis, a measure that has been widely used in media and scholarly circles.
In May 2014, after revisiting its poverty definition, methodology and economic changes around the world, the World Bank proposed another major revision to PPP calculation methodology, international poverty line and indexing it to 2011 US dollar. The new method proposes setting poverty line at $1.78 per day on 2011 PPP basis. According to this revised World Bank methodology, India had 179.6 million people below the new poverty line, China had 137.6 million, and the world had 872.3 million people below the new poverty line on an equivalent basis as of 2013. India, in other words, while having 17.5% of total world's population, had 20.6% share of world's poor. In October 2015, the World Bank updated the international poverty line to US$1.90 a day.
The Rangarajan Committee set up to look into the poverty line estimation in India submitted its report in June 2014.[86] It amended the calculation of the poverty line based on per capita consumption expenditure per month or day given by the Tendulkar Committee. The new poverty threshold for rural areas was fixed at Rs 972 per month or Rs 32 per day. For urban areas, it was fixed at Rs 1407 per month or Rs 47 per day. Under this methodology, the population below the poverty line in 2009-2010 was 454 million (38.2% of the population) and that in 2011-2012 was 363 million (29.5% of the population).
From November 2017, the World Bank started reporting poverty rates for all countries using two new international poverty lines: a "lower middle-income" line set at $3.20 per day and an "upper middle-income" line set at $5.50 per day. These are in addition to the earlier poverty line of $1.90 per day. The new lines are supposed to serve two purposes. One, they account for the fact that achieving the same set of capabilities may need a different set of goods and services in different countries and, specifically, a costlier set in richer countries. Second, they allow for cross-country comparisons and benchmarking both within and across developing regions. India falls in the lower middle-income category. Using the $3.20 per day poverty line, the percentage of the population living in poverty in India (2011) was 60%. This means that 763 million people in India were living below this poverty line in 2011.
Semi-economic measures of povertyOther measures such as the semi-economic Multi-dimensional Poverty Index (MPI), which places 33% weight on education and number of schooling years in its definition of poverty, and places 6.25% weight on income and assets owned, suggests there were 650 million people (53.7% of population) living in MPI-poverty in India.[6] 421 million of MPI-defined poor are concentrated in eight North Indian and East Indian states of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal. The table below presents this semi-economic poverty among the states of India based on the Multi-dimensional Poverty Index, using a small sample survey data for Indian states in 2005.
Reserve Bank of India (2012)
In its annual report of 2012, the Reserve Bank of Indian named the state of Goa as having the least poverty of 5.09% while the national average stood at 21.92%
The table below presents the poverty statistics for rural, urban and
combined percentage below poverty line (BPL) for each State or Union
Territory.The
highest poverty statistics for each category column is coloured light red in the table below.
| Andhra Pradesh |
6180 |
10.96 |
860.00 |
1698 |
5.81 |
1009.00 |
7878 |
9.20
|
| Arunachal Pradesh |
425 |
38.93 |
930.00 |
66 |
20.33 |
1060.00 |
491 |
34.67
|
| Assam |
9206 |
33.89 |
828.00 |
921 |
20.49 |
1008.00 |
10127 |
31.98
|
| Bihar |
32040 |
34.06 |
778.00 |
3775 |
31.23 |
923.00 |
35815 |
33.74
|
| Chhattisgarh |
8890 |
44.61 |
738.00 |
1522 |
24.75 |
849.00 |
10411 |
39.93
|
| Goa |
37 |
6.81 |
1090.00 |
38 |
4.09 |
1134.00 |
75 |
5.09
|
| Gujarat |
7535 |
21.50 |
932.00 |
2688 |
10.14 |
1152.00 |
10223 |
16.63
|
| Haryana |
1942 |
11.64 |
1015.00 |
941 |
10.28 |
1169.00 |
2883 |
11.16
|
| Himachal Pradesh |
529 |
8.48 |
913.00 |
30 |
4.33 |
1064.00 |
559 |
8.06
|
| Jammu & Kashmir |
1073 |
11.54 |
891.00 |
253 |
7.20 |
988.00 |
1327 |
10.35
|
| Jharkhand |
10409 |
40.84 |
748.00 |
2024 |
24.83 |
974.00 |
12433 |
36.96
|
| Karnataka |
9280 |
24.53 |
902.00 |
3696 |
15.25 |
1089.00 |
12976 |
20.91
|
| Kerala |
1548 |
9.14 |
1018.00 |
846 |
4.97 |
987.00 |
2395 |
7.05
|
| Madhya Pradesh |
19095 |
35.74 |
771.00 |
4310 |
21.00 |
897.00 |
23406 |
31.65
|
| Maharashtra |
15056 |
24.22 |
967.00 |
4736 |
9.12 |
1126.00 |
19792 |
17.35
|
| Manipur |
745 |
38.80 |
1118.00 |
278 |
32.59 |
1170.00 |
1022 |
36.89
|
| Meghalaya |
304 |
12.53 |
888.00 |
57 |
9.26 |
1154.00 |
361 |
11.87
|
| Mizoram |
191 |
35.43 |
1066.00 |
37 |
6.36 |
1155.00 |
227 |
20.40
|
| Nagaland |
276 |
19.93 |
1270.00 |
100 |
16.48 |
1302.00 |
376 |
18.88
|
| Odisha |
12614 |
35.69 |
695.00 |
1239 |
17.29 |
861.00 |
13853 |
32.59
|
| Punjab |
1335 |
7.66 |
1054.00 |
982 |
9.24 |
1155.00 |
2318 |
8.26
|
| Rajasthan |
8419 |
16.05 |
905.00 |
1873 |
10.69 |
1002.00 |
10292 |
14.72
|
| Sikkim |
45 |
9.85 |
930.00 |
6 |
3.66 |
1226.00 |
51 |
8.19
|
| Tamil Nadu |
5923 |
15.83 |
880.00 |
2340 |
6.54 |
937.00 |
8263 |
11.28
|
| Tripura |
449 |
16.53 |
798.00 |
75 |
7.42 |
920.00 |
524 |
14.05
|
| Uttar Pradesh |
47935 |
30.40 |
768.00 |
11884 |
26.06 |
941.00 |
59819 |
29.43
|
| Uttarakhand |
825 |
11.62 |
880.00 |
335 |
10.48 |
1082.00 |
1160 |
11.26
|
| West Bengal |
14114 |
22.52 |
783.00 |
4383 |
14.66 |
981.00 |
18498 |
19.98
|
| Andaman & Nicobar Islands |
4 |
1.57 |
- |
0 |
0.00 |
- |
4 |
1.00
|
| Chandigarh |
0 |
1.64 |
- |
234 |
22.31 |
- |
235 |
21.81
|
| Dadra & Nagar Haveli |
115 |
62.59 |
- |
28 |
15.38 |
- |
143 |
39.31
|
| Daman and Diu |
0 |
0.00 |
- |
26 |
12.62 |
- |
26 |
9.86
|
| Delhi |
50 |
12.92 |
1145.00 |
1646 |
9.84 |
1134.00 |
1696 |
9.91
|
| Lakshadweep |
0 |
0.00 |
- |
2 |
3.44 |
- |
2 |
2.77
|
| Puducherry |
69 |
17.06 |
1301.00 |
55 |
6.30 |
1309.00 |
124 |
9.69
|
| All India |
216658 |
25.70 |
816.00 |
53125 |
13.70 |
1000.00 |
269783 |
21.92
|