Understanding poverty in India demands a nuanced assessment

We should be careful with global comparisons and keep track of inter-generational mobility as well

- NIRANJAN RAJADHYAKSHA

The issue of inclusive economic growth has once again gained the spotlight. The World Bank said in early June that the number of Indians in absolute poverty, or those living on less than $3 a day based on purchasing power parity, dropped from 206 million in 2011-12 to 75 million in 2022-23. This sharp decline was despite an increase in the poverty threshold used by the World Bank. The Indian poverty rate fell from 16.22% to 5.25%.

The poverty line used to make these estimates is the median national poverty line of 28 low-income countries, or those facing mass deprivation. However, India is no longer a low-income country. It is a lower middle-income country that should hopefully become an upper middle-income country in the early years of the next decade. The poverty lines for these two groups of countries are naturally much higher, at $4.20 and $8.30, respectively. These would be the correct gauges to understand the extent of poverty in India.

The second debate has been about inequality. Have the benefits of growth been distributed equally? World Bank data showed that inequality had come down in India between 2011-12 and 2022-23. It is usually measured using the Gini coefficient, with a value of zero depicting perfect equality and a value of 100 depicting perfect inequality. India's Gini fell from 28.8 to 25.5, suggesting that the fruits of economic growth are now more equally distributed.