Can We Feed the Hungry with Statistics of National Prosperity?
M. Veerappa Moily
The World Bank has revised the global poverty line, leading to a recalculation of poverty rates in India.
India’s official poverty line was last changed in 2009 based on the Tendulkar Committee recommendations. In 2015, the Rangarajan Committee made recommendations updating poverty lines but there is no clarity on whether these have been taken into account. As Dipa Sinha notes in her piece for The Wire, India has stopped estimating consumption-based poverty after 2011-12 and has been relying on the World Bank and IMF estimates since.
The World Bank's fresh estimate of poverty markers has set the line for low income at $3 (2017 purchasing power parity or PPP) worth of consumption a day from $2.15 (2017 purchasing power parity or PPP). For lower income countries, the cut-off has been increased to $4.20 from $3.65. Based on this new line, the poverty ratio in India is estimated to be 5.25% compared to 27.12% in 2011-12.
Based on the latest data from the International Comparison Program (ICP) based on which these new estimates have been released, one PPP$ is roughly equivalent to Rs 20. Therefore, this new poverty line of $3 a day reflecting extreme poverty is equivalent to only Rs 60 per day of consumption expenditure per person. On the basis of the higher IPL of $4.2 PPP (i.e. Rs 84) per day, 23.89% of Indians are estimated to be living below the poverty line.
The absence of comparable consumption data is a major issue in the case of India. The World Bank’s decision to use Indian data for global poverty estimation could raise questions on the credibility of its estimate for poverty across the world. The PPP estimates seem off too. Its methodology changes thus come under the scanner.
Poverty is a multidimensional, dynamic phenomenon intertwined with inequality, job quality, gender disparities, and regional imbalances. Statistics alone cannot capture its complexities. Reports of sharp declines in extreme poverty percentages, especially amid economic shocks and absence of official consumption data, call for cautious interpretation.
While it could be true that the poverty ratio has declined in the last decade, there are number of questions related to the data and methodology which put a cloud over both the extent of decline as well as the level of poverty currently.
It can be proclaimed that poverty line is low and India has been able to reduce extreme misery to a single digit. But 75 million below this level is still a large number!
Official poverty estimates, like those from the World Bank, may not fully capture the extent of poverty in India, particularly when considering factors like food security and access to basic needs.
India ranks 105th out of 127 countries in the Global Hunger Index (GHI) 2024 with a score of 27.3, highlighting a "serious" hunger crisis driven by ongoing challenges of food insecurity and malnutrition.
The absence of an updated, publicly released official consumption expenditure survey since 2011-12 complicates the poverty measurement exercise. The government withheld the findings of the 2017-18 NSSO consumption survey reportedly due to concerns over data quality, though media leaks indicated a decline in per capita consumption, a critical poverty indicator. Furthermore, the World Bank’s reliance on modelled estimates and interpolated data raises questions about the data’s accuracy, particularly in capturing post-2019 economic disruptions.
India’s economy contracted by 7.3% in the fiscal year 2020-21 due to the COVID-19 pandemic accompanied by unprecedented reverse migration, job losses, and a surge in informal work.
Reports by Azim Premji University’s Centre for Sustainable Employment showed that 230 million Indians fell below the national minimum wage poverty line during the pandemic’s peak. Given this context, the claim that extreme poverty had been reduced to just 5.3% by 2022-23 invite skepticism.
The World Bank figures indicate that rural extreme poverty has dropped dramatically to 2.8%, yet rural distress remains palpable. Agricultural wages have stagnated in real terms, and farm incomes remain volatile.
According to National Bank for Agriculture and Rural Development, nearly 60% of rural households still depend on agriculture, where productivity is low, and 82% of farmers operate on marginal or small landholdings.
The rapid increase in self-employment noted in the World Bank report camouflaged unemployment. Many rural families resort to marginal livelihoods like petty trading, driving e-rickshaws, or subsistence farming, not by choice but due to a lack of viable alternatives.
Also read: India's GDP 'Milestone': Five Ways the Typical Indian Experience Differs From the Grand Narrative
India has the most billionaires in the world per trillion dollars of GDP, indicating that income and capital have been accumulating in the hands of a few. Concentration of economic power among a small group of individuals or organisations or corporates translates into a massive political power as seen in recent times. If power is to be concentrated in the hands of a few, it also means that India’s economic journey will be dependent on them.
India has a functioning democracy but unfortunately, it has turned to an ‘electoral autocracy’, due to the transition of power from the people to the oligarchs and to shrinking freedoms in almost all spheres of democracy. Oligarchies are dependent on quid pro quo which breeds corruption and this undermines not just the rule of law but also trust in democratic institutions. The much pronounced Lokpal Act is unfortunately in limbo. The current trend distorts the economy and policymaking in order to serve the oligarchs interests at the expense of the vast majority of the country’s populace.
If India has to look forward, it is not where the top 20% invest confidently in markets instead we need the 60% of middle class also to build assets and the rest 30% to at least live without fear of falling into the debt traps. The recent statement of finance minister Nirmala Sitharaman exposes the low credit intake by MSMEs and farming classes. Structural growth will come from business and investors that move down the market with purpose driven not just by reach but by relevance.
It is not just wealth disparities alone, social inequalities have widened too. Even in the case of education, opportunities have widened for the less powerful poor class. If income and opportunity are elusive, individuals from lower social strata cannot advance and this further strengthens existing power structure. The current Indian scenario has limited social mobility!
The manufacturing sector is declining year to year. The government pays much lip service to small and medium-size companies but it has failed them. These businesses put together are the largest employers of India and are crucial to the Indian economy. Employments in PSUs have been declining sharply.
India is facing a serious economic risk falling into the middle-income trap. This happens when a country’s median income is stuck in the middle-income bracket even as its economy continues to grow. It means that common citizens stay in the same place or retreat, financially speaking, while the super-wealthy get exponentially richer!
Jobless growth, sectorial imbalances, governance issues, limited financial resources, inefficient utilisation of resources, and corruption have been plaguing the Indian economy.
According to Human Development Report 2025, India faced 30.7% loss in human development due to glaring inequality in the country. The poorest 40% population has an income share of 20.2% whereas the richest 10% hold 25.5% of the income share.
The Multidimensional Poverty Index (MPI) finds that 16.4% population in India is living under multidimensional poverty whereas 4.2% population is living under severe multidimensional poverty and 18.7% of the population is vulnerable to multidimensional poverty. Persistent social inequalities based on caste, gender and more continue to perpetuate economic disparities. On the Gender Inequality Index (GII), India is ranks 102 out of 193 countries. The caste factor dominates the social and economic scenario leading to inequality in India.
Former Planning Commission Secretary N.C. Saxena has noted that unless destitution estimates are triangulated with independent sources such as the Census or the National Family Health Survey conclusions on poverty will remain doubtful.
Hence, reports of sharp declines in extreme poverty percentages, especially amid the current world political crisis and economic shocks, apart from the absence of official consumption data, call for cautious interpretation. To quote David Lloyd George, “We cannot feed the hungry with statistics of national prosperity."
M. Veerappa Moily is a former Union Minister of petroleum, law, power, corporate affairs and former chief minister of Karnataka.
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