Poverty and inequality in India - statistics & facts
Despite exponential economic growth, eradicating poverty has remained the mainstay of Indian politics even decades after independence. Recent data suggests that India has almost eradicated extreme poverty. But who is considered poor? While poverty is traditionally defined as the share of the people below the poverty line also called the head-count ratio, it may vary depending on country or region. However, measuring poverty is complex and lies in establishing a poverty threshold. There are a wide range of poverty estimates depending on differences in survey methodologies or the duration of time for the surveys.
Closely corresponding to this poverty line, an American think tank’s estimates for the financial year 2023 suggest that at the 1.90-U.S. dollar PPP (adjusted for purchasing power parity) poverty line, extreme poverty in India reduced to two percent. However, it is also argued this threshold represents below-subsistence-level consumption in India.
The chorus for increasing the poverty line for India as the economy grows and the current one does not match India’s status as a lower-middle-income country. As per the World Bank’s poverty headcount which sets poverty line for this group at 3.65 U.S. dollars, poverty in India declined from 61 percent in 2015 to 44 percent in 2021.
The widely popular global multidimensional poverty index (MPI) is an international metric that considers several dimensions, and the intensity of deprivation experienced by poor households. MPI is measured using three dimensions, each weighing one-third: health, education, and standard of living. As per latest estimates of the government’s think tank Niti Aayog, over 16 percent of the Indian population was multidimensionally poor.
Since India opened its markets to foreign investment in 1991, its number of billionaires has surged. Asia’s two richest men are Indians. Forbes billionaire rankings show that the number of Indians with net wealth exceeding one billion dollars rose exponentially whereas, minimum wages have barely increased over the years. The country aims to shift to a living wage in 2025 to solve the problem.
The generation of non-farm jobs, progressive taxation on income and wealth, and social expenditure on health, education, and insurance are some mammoth tasks the country needs to undertake to create a fair and equitable society. After all, subsidized grains can avert hunger, not poverty.
Measuring poverty
The official consumption-based poverty line for India was devised by the Tendulkar Committee in 2009. It pegged India’s poverty line at an expenditure level of 33 and 27 rupees per day for urban and rural areas respectively.Closely corresponding to this poverty line, an American think tank’s estimates for the financial year 2023 suggest that at the 1.90-U.S. dollar PPP (adjusted for purchasing power parity) poverty line, extreme poverty in India reduced to two percent. However, it is also argued this threshold represents below-subsistence-level consumption in India.
The chorus for increasing the poverty line for India as the economy grows and the current one does not match India’s status as a lower-middle-income country. As per the World Bank’s poverty headcount which sets poverty line for this group at 3.65 U.S. dollars, poverty in India declined from 61 percent in 2015 to 44 percent in 2021.
The widely popular global multidimensional poverty index (MPI) is an international metric that considers several dimensions, and the intensity of deprivation experienced by poor households. MPI is measured using three dimensions, each weighing one-third: health, education, and standard of living. As per latest estimates of the government’s think tank Niti Aayog, over 16 percent of the Indian population was multidimensionally poor.
Surging inequalities
Poverty and inequality are inextricably linked. In India, top one percent’s share in wealth was as high as 40 percent. Regarding income inequality, the top percent scrapped around 22 percent of the national income during the period. Income inequality ultimately leads to wealth inequality over a while. This makes India one of the most unequal countries in the world. The inequality gap is also regional. Poverty remains concentrated in states with higher populations.Since India opened its markets to foreign investment in 1991, its number of billionaires has surged. Asia’s two richest men are Indians. Forbes billionaire rankings show that the number of Indians with net wealth exceeding one billion dollars rose exponentially whereas, minimum wages have barely increased over the years. The country aims to shift to a living wage in 2025 to solve the problem.
The generation of non-farm jobs, progressive taxation on income and wealth, and social expenditure on health, education, and insurance are some mammoth tasks the country needs to undertake to create a fair and equitable society. After all, subsidized grains can avert hunger, not poverty.
