Poverty and Inequality
STORIES, ANALYSES, EXPERT VIEWS
India’s efforts to reduce poverty have produced admirable results. As per the World Bank’s revised poverty line, between 2011 and 2023, approximately 270 million people have been able to . That’s more than the population of Germany and Russia, combined.
Poverty is multidimensional: 12 basic needs
It is now widely recognised, writes Parikrama Chowdhry (Lead - Policy (Scale-ups) at J-PAL South Asia) “that poverty is multidimensional, encompassing more than just lack of money….It looks at 12 basic needs across health, education, and standard of living to understand how people are deprived in different parts of their lives. A person is considered poor if they are deprived in at least one-third of the indicators used.”
Based on this approach, NITI Aayog’s discussion paper mentions that nearly people in India still face multiple hardships. Poverty remains severe, with the poorest struggling to meet about half of their 12 basic needs.
Fresh approach to design anti-poverty programmes
This multi-pronged way to measure and study poverty, “also demands a fresh approach to design anti-poverty programmes. For governments, it means investing in programmes that give people living in extreme poverty the tools to escape the poverty trap….”
Graduation Approach: The Graduation Approach “provides the poorest of the poor a sequential and complementary package that includes a productive asset such as livestock or small items for trading, training to manage them, some money for up to a year to meet their immediate needs, and mentorship to manage their income and savings. The programme has become a global success. It has reached and improved the standard of living for millions of households following randomised evaluations by researchers….”
The Graduation Approach’s close alignment with the national gives Indian States as well as the federal government a useful blueprint to design anti-poverty programmes effective in handling its multidimensional nature.
Common deprivations: It “helps policymakers to identify the key areas that need urgent attention. For instance, the most common deprivation bundle in India is across four categories: nutrition, housing, sanitation, and clean cooking fuel. More than lack access to these in India. Policies that target these areas in tandem are likely to have a much greater impact on poverty reduction.”
India not among the world’s most equal societies: Gini Index wrong
There is a global debate on whether poverty is worse than inequality. With reference to India, Prachi Dutta (Lawyer qualified to practice law in New York and India. She advises start ups, funds and companies on corporate, investment and regulatory related matters) is of the view that the Gini Index which ranked India among the world’s most equal societies, by giving the country a score of 25.5, is wrong. This places India in a ‘moderately low’ inequality category. While this may be cause for celebration, Dutta writes “the lived reality in India paints a very different picture. Inequalities, lived and those captured in statistics, permeate into everyday life in urban and rural India……While gender, economic, health, educational, and social inequalities have always been endemic to India, with technology and a modern ways of life, new forms of inequality such as digital and banking inequality have arisen.”
Dutta mentions that various forms of inequality in India.
Wealth inequality: One of the fundamental forms of inequality is wealth inequality. Statistics also supports this reality, states Dutta. According to a study titled ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj’, in 2022-23, 22.6% of the national income went to just the top 1% of the population. Further, the study mentions that data on wealth inequality is challenging to capture because of the large-scale prevalence of informal employment, low-income levels, and high thresholds for non-taxable incomes, which means that data on tax pertains to less than 10% of the adult population.
Gender inequality: This is another fundamental form of inequality in India. Women have historically been marginalised from the workforce and comprise about 35.9% of the worker population ratio. “Social norms aggravate gender inequality in terms of spending family resources on the girl child, and in matters of inheritance.”
Digital divide: Dutta also mentions “a severe digital divide. Lack of access to the Internet and to digital technology exacerbates the digital divide, leading to lack of opportunities for a certain demography…..Access to quality higher education and even basic entry-level jobs are difficult for students left behind. They are then pushed into employment that requires lower skills. This digital divide will continue to perpetuate the cycle of inequality at the household level.”
