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Wednesday, March 21, 2012

India sees a big drop in poverty as number of poor falls from 37% to 30% in 5 years

NEW DELHI: The number of India's poor fell to 29.8% of its population in 2009-10 from 37.2% in 2004-05, one of the sharpest falls ever. This suggests India has not only grown faster than the world economy, but that this growth has lifted millions out of poverty.
In absolute terms, the number of poor in the country declined by around 13% to 354 million during the fiveyear period with rural poverty falling faster than urban poverty. During the period, rural poverty declined by 8 percentage points to 33.8%, almost double the decline of urban poor by 4.8 percentage points to 20.9%.
"This is not surprising. Such an outcome is on expected lines as this is the period when the government increased the expenditure on flagship programmes substantially. We gave money to the people and the result is a direct impact of that," said Mihir Shah, member, Planning Commission.
The numbers also re-affirm the impact of the government's flagship Mahatma Gandhi National Rural Employment Guarantee Scheme that entitles 100 days of work at a minimum rate of Rs 100 per day to all rural households. The scheme was launched in 2006 and has single-handedly transformed rural India.
Other successful government schemes such as Pradhan Mantri Gram Sadak Yojana, catering to rural roads, and Rashtriya Swasthya Bima Yojana, providing health insurance, also picked up steam in the period under consideration.
Shah clarified the commission will not use the numbers as eligibility criteria to give out entitlements under various schemes, including the Food Security Bill.
Numbers will be Used only to Gauge Govt Performance
"We are breaking away from the practice of basing entitlements under government programmes on mere poverty lines. We understand that poverty is multi-dimensional and cannot be based only on percapita consumption expenditure alone," said Shah.
The current numbers, Shah added, will be used only to gauge the performance of the government in combating poverty.
The poverty numbers have been arrived at by the commission after taking into account per capita spending numbers from the 66th round of the National Sample Survey ( NSS) as recommended by the Suresh Tendulkar expert committee on poverty estimation.
The panel had suggested moving away from taking the calorie intake as the defining parameter for poverty line to a more comprehensive method of using per capita expenditure data on basic needs such as food, clothing, housing and services like health and education.
Independent analysts say that while the numbers are impressive, they show the fall in poverty is largely because of government spending and intervention, not high growth per se.
"The numbers are impressive. It is primarily proportional to the spending of the Centre and state governments rather than the trickle-down effect of overall growth," said Himanshu, professor at Jawaharlal Nehru University and a visiting fellow at the Centre de Sciences Humaines, New Delhi.
"This explains why states with high growth rate such as Bihar have not fared as well as some states with low growth rates such as Orissa and Madhya Pradesh," added Himanshu.
Most analysts agree that rural India will continue to be the focus of policymakers as it still has more poor people.
"This shows the government was on the right track. But to sustain the decline, policymakers will have to improve delivery mechanisms, improve design of schemes and plug leakages," said Sonal Desai, economist at the National Council of Applied Economic Research.
Source : The Economic Times, March 20, 2012

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