Understanding Poverty in India

Abstract

The incidence of poverty in India is a matter of key concern for policy analysts and academic researchers both because of its scope and intensity. National poverty line estimates indicated a poverty incidence of 27.5 percent in 2004-2005, implying that over one quarter of the population in India lives below the poverty line. Also, in absolute numbers, India still has 301.7 million poor persons with a significant percentage of them being substantially or severely poor in terms of the norms identified as being necessary for survival. If one considers the international poverty line of $1 per day (measured at 1993 purchasing power parity exchange rates), then the percentage of poor people in India is even higher, at around 34 percent. This percentage is pushed up to an alarming level of 80 percent if one uses the $2 per day as a poverty threshold. The significance of India in the context of world poverty is apparent given the fact that around half of the world's poor live in South Asia and of the 534 million people in South Asia who lived on less than $1 per day in 2003, over 300 million lived in India. The Suresh Tendulkar Committee estimated over 430 million (37.2 percent) below the poverty line based on a bundle of deprivations. The recently introduced multi dimensional deprivation index (MPI) also places about 645 million (55.4 percent) Indians below the poverty line. In terms of non-income dimensions of poverty too, such as infant and maternal mortality rates, literacy levels and gender inequalities, India continues to display 'intense poverty'. While economic growth is a powerful tool for poverty reduction, the impact of higher growth on poverty reduction depends significantly on the pattern of growth and levels of inequality. Owing to rapid growth in recent years, the Indian economy has also undergone significant structural changes. Inclusive growth has therefore become a major policy priority and is defined as a process whereby the benefits of growth are shared by a vast proportion of the population.