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India has almost wiped out extreme poverty: IMF
Context
An International Monetary Fund (IMF) working paper by Bhalla, Bhasin and Virmani (henceforth called BBV) has come out with a series of poverty projections based on different assumptions, the most optimistic of which shows extreme poverty virtually disappearing at just 0.86% of the population (12 million people).
Key-highlights
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Purchasing power parity (PPP) is a metric that equalises the buying power of different currencies to make comparisons easy. |
- The IMF working paper -- authored by economists Surjit Bhalla, Arvind Virmani and Karan Bhasin -- said that the proportion of people living in extreme poverty, at less than 1%, remained steady even during the pandemic on the back of “in-kind” subsidies, especially food rations.
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The Gini coefficient ranges from 0 to 1, with 0 representing perfect equality and 1 representing perfect inequality. |
- In India, the number of people living in extreme poverty -- defined by the World Bank as living on US$1.9 or less in purchasing power parity (PPP) terms -- was 0.8% of the population in the pre-pandemic year 2019.
- Real (inflation-adjusted) inequality, as measured by the Gini coefficient, which stands at 0.294, is now very close to its lowest level of 0.284 observed in 1993-94, the paper stated.
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What is Extreme Poverty?
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India’s poverty line
- In India, the official consumption-based poverty line is still the Tendulkar Line, which is close to the World Bank's $1.9 a day line.
- The Tendulkar Expert Group chaired by economist Suresh Tendulkar in 2009 was formed to review the methodology for poverty estimation.
- The committee finalised the per person per day consumption figure of Rs 32 a day for urban areas and Rs 26 a day for rural areas.
- The national poverty line for 2011-’12 was estimated at Rs 816 per capita per month for rural areas and Rs 1,000 per capita per month for urban areas.
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Rangarajan Committee
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NSO’s poverty figure
- India will finally have its official poverty figure in the second half of this year.
- The National Statistical Office (NSO) is currently rolling out the consumption expenditure sample survey, which is used to measure poverty level.
- The survey will continue through July 2023 and preliminary results are expected by the end of the year.
Poverty Alleviation Scheme
- Schemes to increase monthly income: The four schemes, Pradhan Mantri Kisan Samman Nidhi (PM Kisan), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Ujjwala Yojana (PMUY) and saving from PMGKAY, together increased a person’s monthly income by Rs. 2,111.
- Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY): It is a programme to distribute a fixed quantity of free foodgrain (5kg per head) to the poor beyond their usual entitlement of 25kg a month of subsidised grains.
- Public Distribution System(PDS) aims to manage food scarcity and distributing essential food commodities at affordable prices.
- National Rural Livelihood Mission (NRLM) was launched in 2011 by the Ministry of Rural Development and aided by the World Bank.
- Pradhan Mantri Awaas Yojana-Gramin (PMAY-G): Due to the gaps in the earlier scheme for rural housing, titled Indira Awaas Yojana (IAY) — it was restructured in 2016to PMAY-G. Through this scheme, the government commits to realizing housing for all.
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