Statistics on Poverty in India

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Content

1. World Bank numbers
2. Indian government numbers
3. Inequality
4. Alternative poverty measurement

1. World Bank numbers

The World Bank, which defines poverty as survival on less than $1.25 per day, says India reduced poverty from 60% of the population to 42% between 1981 and 2005. The number in 2010 was 33%.

(source)

An impressive improvement, although not as impressive as China’s. Also, India still accounts for one-third of the world’s 1.4 billion poor people:

(source)

The state of Uttar Pradesh alone has 8% of the world’s population who live in extreme poverty.

Interesting factoid: if income in India were distributed completely equally, the entire nation would still be living on less than half the UK poverty line. (The UK poverty line is a relative line: you’re poor in the UK when your income after tax is below 60% of the national median).

While the trend in India is going in the right direction, our optimism should be womewhat tempered when we consider that 43% of Indian children are still malnourished, and that is also a third of the world’s total. Over 35% of Indians are illiterate, and more than 20 million children are out of school.

The main causes of the reduction in the poverty rate over the last decade are undoubtedly the “green revolution” and, in recent years, the steady economic growth (I argued here that there is, generally, a correspondence between faster per capita economic growth and faster poverty reduction).

Here’s how South Asia – which is almost entirely India – compares to East Asia and Africa, in absolute numbers of people now rather than in percentages of population:

(source)

Here’s another graph showing the absolute numbers of people below the World Bank poverty line (also compared to China and Africa):

(source)

The number of poor people has grown in South Asia, but that’s partly because the total population has grown. The proportation of poor people in the total population has come down recently, after decades of stagnation:

(source)

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2. Indian government numbers

The government of India uses a method to measure poverty that is different from the World Bank measurement: given that an average adult male has to eat food representing approximately 2000-2500 calories per day in order to sustain the human body, how much would it cost to buy these calories? Those who have an income that is lower than this cost, are considered poor.

Actually, the Indian government uses the thresholds of 2,400 calories a day in rural areas and 2,100 in urban areas. (City dwellers are thought to exert less energy, so they should need to consume less. See here).

This translates into an official poverty line set at 26 rupees (around $0.53) per person per day in rural areas and 32 rupees in urban areas (reflecting the different cost of food in cities). This calorie based measure was developed in the early 1970s. Subsequently, the poverty line has simply been updated using consumer price indices. The official line delivers a current poverty rate of around 32% of the population, as opposed to the 42% according to the World Bank.

(source, this graph uses the percentage of the population in poverty, or headcount poverty; the measure of poverty used is the one based on calorie intake described above; this information comes from the National Sample Survey (NSS), which tracks consumption by a representative sample of the population – survey data only available for the years in the graph)

Of course, the Indian system, like all poverty measures, can be criticized. A person may be able to afford to buy food that contains 2,400 calories, but the quality or nutritional value of this food (in terms of vitamins etc.) may be so low that we can hardly exclude this person from the population of the poor. He or she may be able to buy 2,400 calories, but not enough nutritional value to lead a decent life.

However, if we take this measurement at face value we see that caloric intake does indeed mirror the poverty statistics in a satisfactory way. Compare the graph above to the one below:

(source)

However, a more fatal criticism of India’s poverty measurements is that it includes only consumption of food. Poverty is more than just a nutritional issue. People may be able to buy enough food of sufficient nutritional quality, but may be left without resources for shelter, healthcare, education etc.

Conclusion: the exact extent of poverty in India is disputed. There is a paper on this controversy here or here. More on poverty in India here.

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3. Inequality

Regarding inequality – which according to some is the better measure of poverty – we see that there has been a deterioration in India’s cities, but not in the country as a whole (see the first graph on this page):

(source)

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4. Alternative poverty measurement

India’s census form ask whether people own certain basic assets such as TV, phone, radio or bicycle. People who mention that they don’t own any of these can be considered poor. The map below colour-codes India’s districts according to the proportion of  households without these assets in each district. Lighter-coloured districts are “better off”:

(source)

In total, around 18% of households are “asset-less”. This poverty rate is a lot lower than the official one.

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