Poverty In India

Poverty is widespread in India, with the nation estimated to have a third of the world's poor. World Bank estimates, 80% of India's population lives on less than $2 a day. According to a 2005 World Bank estimate, 41% of India falls below the international poverty line of US$ 1.25 a day (PPP, in nominal terms Indian Rupee 21.6 a day in urban areas and Indian Rupee 14.3 in rural areas); having reduced from 60% in 1981.

According to the criterion used by the Planning Commission of India 27.5% of the population was living below the poverty line in 2004–2005, down from 51.3% in 1977–1978, and 36% in 1993-1994. A study by the Oxford Poverty and Human Development Initiative using a Multi-dimensional Poverty Index (MPI) found that there were 421 million poor living under the MPI in eight north India states of Bihar, Chattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal. This number is higher than the 410 million poor living in the 26 poorest African nations.

Estimates by NCAER (National Council of Applied Economic Research), show that 48% of the Indian households earn more than Indian Rupee 90,000 (US$1,953) 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 Indian Rupee 45,000) accounted for only 15.6 % of them or about 35 million (about 200 million Indians). Another 80 million households are in income levels of Indian Rupee 45,000-90,000 per year.

Since the 1950s, the Indian government and non-governmental organizations have initiated several programs to alleviate poverty, including subsidizing food and other necessities, increased access to loans, improving agricultural techniques and price supports, and promoting education and family planning. These measures have helped eliminate famines, cut absolute poverty levels by more than half, and reduced illiteracy and malnutrition.

Poverty Estimates

The World Bank estimates that 456 million Indians (41.6% of the total Indian population) now live under the global poverty line of US$ 1.25 per day (PPP). This means that a third of the global poor now reside in India. However, this also represents a significant decline in poverty from the 60 percent level in 1981 to 42 percent in 2005. The rupee has decreased in value since then, while the official standard of Indian Rupee 538 (urban)/Indian Rupee 356 (rural) per month has remained the same. Income inequality in India is increasing, with a Gini coefficient of 32.5 in 1999-2000.

However, according to the latest NCAER estimates, in 2009, only 15.6% of the households or 200 million people, had income levels less than Indian Rupee 45,000 annually(US$ 1.4 PPP per person).On the other hand, the Planning Commission of India uses its own criteria and has estimated that 27.5% of the population was living below the poverty line in 2004–2005, down from 51.3% in 1977–1978, and 36% in 1993-1994. The source for this was the 61st round of the National Sample Survey (NSS) and the criterion used was monthly per capita consumption expenditure below Indian Rupee 356.35 for rural areas and Indian Rupee 538.60 for urban areas. 75% of the poor are in rural areas, most of them are daily wagers, self-employed householders and landless labourers.

Although the Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas. Between 1999 and 2008, the annualized growth rates for Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%). Poverty rates in rural Orissa (43%) and rural Bihar (41%) are among the world's most extreme. A study by the Oxford Poverty and Human Development Initiative using a Multi-dimensional Poverty Index (MPI) found that there were 421 million poor living under the MPI in Bihar, Chattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal. This number is higher than the 410 million poor living in the 26 poorest African nations.

Despite significant economic progress, one quarter of the nation's population earns less than the government-specified poverty threshold of 12 rupees per day (approximately US$ 0.25). Official figures estimate that 27.5% of Indians lived below the national poverty line in 2004-2005. A 2007 report by the state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees (approximately US$0.50 nominal; US$2 PPP) per day. It is relevant to view poverty in India on a PPP basis as food etc. are purchased in Rupees. So the annual income of a family of four at US$2 PPP/day (current exchange rate of Indian Rupee 47 = US$1) would be Indian Rupee 137,240 (i.e. Indian Rupee 1.37 lakh).

According to a recently released World Bank report, India is on track to meet its poverty reduction goals. However by 2015, an estimated 53 million people will still live in extreme poverty and 23.6% of the population will still live under US$1.25 per day. This number is expected to reduce to 20.3% or 268 million people by 2020.[17] However, at the same time, the effects of the worldwide recession in 2009 have plunged 100 million more Indians into poverty than there were in 2004, increasing the effective poverty rate from 27.5% to 37.2%.

As per the 2001 census, 35.5% of Indian households availed of banking services, 35.1% owned a radio or transistor, 31.6% a television, 9.1% a phone, 43.7% a bicycle, 11.7% a scooter, motorcycle or a moped, and 2.5% a car, jeep or van; 34.5% of the households had none of these assets. [19] According to Department of Telecommunications of India the phone density has reached 33.23% by Dec 2008 and has an annual growth of 40%. [20]. This tallies with the fact that a family of four with an annual income of 1.37 lakh Rupees could afford some of these luxury items.

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