Skip to main content

India’s new poverty numbers

Author: Shardul Oza

The Planning Commission has released new poverty estimates for the country, showing that the percentage of people living below the poverty line poor fell from from 37% to 29.8% from 2004-2005 to 2009-2010.  According to the Commission, the fall is poverty in directly attributable to the success of government welfare programs such as the National Rural Employment Guarantee Act, a government scheme that guarantees rural Indians 100 days of paid work.

The announcement received widespread media coverage, with many outlets focusing on the standard that the government used to measure the number of poor in the country. The government’s used a poverty line of Rs. 22 a day for rural areas and Rs. 28 a day for urban areas. The opposition party(ies) and numerous activists have criticized the government, claiming that these estimates grossly underestimate the number of people who are deprived (i.e. way more than 30% of the country is poor). Crudely paraphrased their argument is as follows: How dare the Commission say only those living below Rs. 28 or Rs. 22 a day are poor, when many more people live in deprivation. And how dare they claim success at reducing poverty based on such an arbitrary and stringent standard?

However, those who argue that the line is too low miss several important points:

1)      A poverty line is always going to be somewhat arbitrary – If the government were to draw the poverty line at Rs. 50 per day instead of Rs. 28, there would still be people just above the line who are almost as deprived as those below the line and who are deprived in some absolute sense. The point is that you have to draw the line based on the dynamics you would like to understand. In this case, the government is  adhering to a high standard for who should be considered poor.

2)      A lower poverty line means greater focus on poorer populations –  Given that the government has finite resources, it has to choose who will benefit from welfare schemes and who will not. Poverty lines help the government focus its resources on those who may need them the most (those who are relatively poorer). As Abhijit Banerjee, director of MIT’s Poverty Action Lab, points out in this erudite piece in The Hindustan Times, raising the poverty line does not magically increase the resources that we have to deal with those who fall below that line. The op-ed page editors of The Hindu, completely disregard this fact when they call for the universalization of social programs to replace poverty-line guided targeting.

In general, the media should do a better job of explaining how experts generate poverty measures and why they are useful. With all the debate over the line, the media has neglected the main takeaway from the estimates: using the government’s stringent definition of poverty, the number of poor people in India has dropped.


Popular Posts

Vocationalisation of education in India: Current Scenario, Key Challenges and New directions

“Every handicraft has to be taught not merely mechanically as is done today, but scientifically. This is to say, the child should learn the why and wherefore of every process.” - Gandhi’s Philosophy of Education

The greatest challenge in Indian education system today is to provide skill based education to the youth. This is exacerbated by a mismatch in demand and supply for the skilled workforce. The penetration of vocational education and training remains poor not only in rural areas, but also in urban regions where there is a higher installed capacity to impart the same. This post is an attempt to make the readers understand the need of vocational education in India. Also, this is an attempt to summarise a few recommendations on the same. 
A recent survey (61st round) conducted by the NSSO found that:

1. The percentage of population that completed primary education was 70%, but less than 10% went on to complete a graduation course and above. Almost 97% of individuals in the age bracket…

Rockstar of Financial Inclusion: Business Correspondent Model of India

About Author:  Jatinder Handoo is a social business enthusiast and a branchless banking practitioner. Currently works at FINO PayTech Ltd and is based out of Mumbai. He is reachable at
India is a hot bed of financial exclusion. A country which houses nearly 16% of the global population  has more than 65% of its people outside the formal financial system (Global Findex 2012). The Indian banking system has adopted multiple approaches to make universal financial inclusion a reality right from early days Indian post-independence banking system. Be it bank nationalization in 1969 or formation of Regional Rural Banks. Formation of NABARD or fostering microfinance through Bank-SHG linkage programme in early 90’s. A shimmering ray hope was rekindled with the growth of JLG based microfinance, however later studies made it clear that the model is credit led, concentrated predominately in the southern region of India thus could not be seen as painting complete financial…

A Platform for Knowledge - Enabling people to learn ..

I received a rather interesting link/website via my email today. The link read as MR University and all I could think of was, "Ok, this must be another website portal of some university or college". Well, on clicking the link and looking through the contents of the site, I was pleasantly surprised. The site is an online education portal or platform that allows users or teachers to upload short videos on topics or lessons they wish to impart. First topic that I come across is Development Economics.
The intent of the website is eloquently put out by the two economists, Tyler Cowen and Alex Tabarrok in the intro video. What started as a blog focusing on economics and its various implications in understanding why things are the way they are around us, has now an interesting addition. A video portal titled MRUniversity or Marginal Revolution University that focuses on online education with subjects pertaining to economics. It brought back to my mind,…