Poverty dips to 8.5% from 21% in 2011-12, says NCAER Paper
- In Reports
- 12:24 PM, Jul 03, 2024
- Myind Staff
A new survey has estimated that poverty has declined to 8.5% from 21% in 2011-12. It highlighted that while chronic poverty has decreased, there remains a significant proportion of people who are vulnerable to slipping back into poverty due to "accidents of life".
Based on the initial findings of the just-concluded India Human Development Survey, poverty headcount ratios have been estimated using the inflation-adjusted poverty line set by the Tendulkar Committee, which is used by the government to formulate and implement its schemes.
According to a paper by economists led by Sonalde Desai of the think tank National Council of Applied Economic Research (NCAER), released recently, there has been a significant decline in headcount poverty ratios in rural areas, from 24.8% in 2011-12 to 8.6% presently. In urban areas, the poverty ratio decreased from 13.4% to 8.4%. These figures are lower than the World Bank's international poverty line of $2.15 using the 2017 purchasing power parity.
The estimates from the India Human Development Survey are higher compared to those from SBI Research, which used the NSSO's Household Consumption Expenditure Survey. SBI Research estimated rural poverty at 7.2% and urban poverty at 4.6%. Former RBI governor C Rangarajan and economist S Mahendra Dev estimated India's poverty rate to have declined to 10.8% in 2022-23 compared to 2011-12, based on HCES data. Niti Aayog CEO B V R Subhramanya recently indicated that the poverty level could be less than 5% based on preliminary estimates from household consumption expenditure data released by the statistics office.
Desai's paper estimated a significant increase in food subsidies through the public distribution system and other benefits provided by multiple schemes run by both the Centre and the states.
However, it suggested that the approach to social protection should focus more on life circumstances such as illness, marriage, and natural disasters, which often push people into poverty, rather than circumstances related to birth such as social identity or region of birth.
Using IHDS data for 2011-12 and 2022-24, the paper estimated that out of the 8.5% classified as poor, 3.2% were poor due to circumstances of birth, while 5.3% became poor due to "accidents of life".
"Historically, India's approach to social safety nets has involved identifying the poor and providing them with priority access to various social protection programmes that include both in-kind and cash assistance. However, the nature of poverty changes with economic growth," says the paper presented at the India Policy Forum on Tuesday, adding that identifying the poor is often a challenge.
The paper said economic growth and poverty decline create a dynamic climate that requires nimble social protection programmes.
"Ensuring that social protection systems keep up with the pace of social transformation will be a key challenge facing India as it strives towards equitable development," it said.
The paper emphasises that flexibility is crucial for effective programme design that can adapt to changing conditions.
It criticises rights-based approaches that establish programmes through legislative acts, noting that such rigid systems can fail to achieve their intended purposes, citing the example of MGNREGA.
The paper proposes three principles for ensuring social safety nets: universal programmes for a defined set of basic safety nets, risk insurance mechanisms, and building flexibility into institutional frameworks.
It argues that a key challenge is to identify and maintain a core set of safety nets that are both limited in scope and adequately funded. It warns that expanding the number of programmes without corresponding increases in resources would undermine this approach, outlining reasons for advocating universal programmes for a limited set of basic safety nets.
Image source: Times of India
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