Extreme poverty in India declined by 12.3 percentage points during 2011-19

Extreme poverty in India declined by 12.3 percentage points between 2011 and 2019, with rural areas doing better than urban centres, according to a working paper of the World Bank.

India has not released a new household consumption survey since the NSS from 2011.

By extension, the country has not released any official estimates of poverty and inequality for over a decade now, added the paper co-authored by economists Sutirtha Sinha Roy and Roy van der Weide.

Earlier, a working paper of the International Monetary Fund (IMF) had said the Pradhan Mantri Garib Kalyan Yojana (PMGKAY), which provides free foodgrains to the poor, played a key role in keeping extreme poverty in India at the lowest level of 0.8 per cent during the pandemic-hit 2020.

"We find that extreme poverty in India has declined by 12.3 percentage points between 2011 and 2019 but at a rate that is significantly lower than observed over the 2004-2011 period.

"Poverty reduction rates in rural areas are higher than in urban areas," said the paper titled 'Poverty in India Has Declined over the Last Decade But Not As Much As Previously Thought'.

The authors further said urban poverty rose by 2 percentage points in 2016 during the demonetisation event and fell sharply thereafter. Rural poverty rose by 10 basis points in 2019 likely due to a growth slowdown.

"Our estimates of poverty for recent periods are more conservative than earlier projections based on consumption growth in national accounts and other survey data," the paper said.

The paper further said the extent of poverty reduction during 2015-2019 is estimated to be notably lower than earlier projections based on growth in private final consumption expenditure reported in national account statistics.

The authors also said there was no evidence of rising consumption inequality in their analysis.

The paper noted that farmers with small landholding sizes have experienced higher income growth.

Real incomes for farmers with the smallest landholdings have grown by 10 per cent in annualised terms between the two survey rounds, compared to a 2 per cent growth for farmers with the largest landholding, it said.

Rural households owning smaller pieces of land are more likely to be poorer than others, it added.