The World Bank report on poverty in India, which claims that the country recorded one of the fastest poverty declines globally, has come at the right time for the BJP government currently under the spotlight for all the wrong reasons. But the poverty reduction story seems almost extraordinary. According to the World Bank, between 2011 and 2023, the proportion of Indians living below the lower-middle-income poverty line of $4.20 a day fell from 57.7 per cent to 16.1 per cent. An estimated 496 million people moved above this threshold. Extreme poverty, measured against the $3-a-day benchmark, declined from 27.1 per cent to 2.6 per cent.
Poverty Reduction Figures Need Context
However, the numbers hide fundamental problems if one accepts them at face value. Perhaps the biggest takeaway from this report is the claim that 496 million people moved out of poverty. While the number is impressive, it needs context. It is more of a statistical estimate derived from the decline in the poverty headcount ratio and changes in the population over the period. It does not mean the World Bank tracked 496 million individuals over 12 years and established that each witnessed an improvement in their standard of living. This is where the headline figure can be misleading. Crossing the poverty line does not necessarily mean achieving economic security.
Household Consumption Survey Raises Questions
More importantly, the government’s own Household Consumption Survey, 2022-23, paints a completely contradictory picture. According to the survey, the average rural consumption, which constitutes 65 per cent of Indians, is just Rs 3,779 per person per month—around Rs 126 per day. This is less than half of the $3 per person per day consumption standard used by the World Bank for 2023. By international standards, this indicates widespread and severe economic hardship.
Therefore, it begs the question that if 496 million have come out of poverty, why does the government still need to provide free food grains to over 800 million citizens under the various central schemes?
World Bank Forecast Faces Economic Challenges
Prime Minister Narendra Modi should be careful while quoting World Bank numbers, which he did recently while launching a metro line. The World Bank report also forecasts that poverty at the $4.20-a-day threshold is set to decline from 14.2 per cent in 2026 to 12.1 per cent by 2028. This is a forecast based on a survey which has several loopholes, as already indicated, and for a developing country like India, much will depend upon the nature of the economic growth and the creation of jobs, wages, food and fuel prices.
Slowing growth rate in terms of jobs, as admitted by the government itself, and increasing inflation indicate that the World Bank forecast is way off the mark again. Statistically, the numbers might look good, but it is the quality of growth that matters most.
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