India's Remarkable Journey: A Decade of Inclusive Growth and the Elimination of Extreme Poverty
In a historic milestone, India has officially eradicated extreme poverty, marking a significant achievement in the realm of socio-economic progress. According to a comprehensive report by the American think tank Brookings, the nation's strong policy focus on redistribution has paved the way for inclusive growth, leading to a remarkable decline in headcount poverty ratio and a substantial rise in household consumption over the past decade.
The report, authored by Surjit Bhalla and Karan Bhasin, highlights India's official consumption expenditure data for 2022-23, offering the first survey-based poverty estimates in over ten years. Real per capita consumption growth has consistently averaged 2.9% per year since 2011-12. Notably, rural areas have witnessed even more robust growth at 3.1%, outpacing urban growth at 2.6%.
A pivotal revelation lies in the unprecedented decline in both urban and rural inequality. The urban Gini index, a measure of inequality, decreased from 36.7 to 31.9, while the rural Gini index declined from 28.7 to 27.0. This substantial reduction in inequality, coupled with high per capita growth, has played a crucial role in eliminating poverty in India for the Purchasing Power Parity (PPP) USD 1.9 poverty line.
The Headcount Poverty Ratio (HCR) for the 2011 PPP USD 1.9 poverty line witnessed a remarkable decline from 12.2% in 2011-12 to an astonishingly low 2% in 2022-23. Rural poverty stands at 2.5%, with urban poverty plummeting to 1%. For the PPP USD 3.2 line, HCR decreased from 53.6% to 20.8%.
It is worth noting that these estimates do not account for the government's distribution of free food (wheat and rice) to approximately two-thirds of the population, nor the utilization of public health and education services.
The Brookings report challenges World Bank estimates, revealing a significantly lower number of poor people in India at both thresholds. A chart tracking India's HCR for the 1.9 USD PPP and the 3.2 USD PPP from 1977-78 underscores the extent of inclusive growth experienced over the past decade.
The authors attribute the relatively higher consumption growth in rural areas to a "strong policy thrust on redistribution through a wide variety of publicly funded programs." Noteworthy initiatives include the national mission for constructing toilets, ensuring universal access to electricity, modern cooking fuel, and, more recently, piped water. The rural access to piped water has surged from 16.8% in August 2019 to an impressive 74.7%.
The report commends government policies such as the Aspirational District Programme, focusing on 112 districts with the lowest development indicators. This targeted approach has played a pivotal role in enhancing development outcomes in these regions.
In conclusion, the Brookings report affirms that India has successfully eliminated extreme poverty, as defined in international comparisons. This accomplishment not only has positive implications for global poverty rates but also signals the need for India to transition to a higher poverty line. This transition presents an opportunity to redefine social protection programs, ensuring better identification of intended beneficiaries and providing greater support to the genuinely needy. The report emphasizes that India's socio-economic journey, marked by inclusive growth and poverty elimination, serves as a beacon for other nations grappling with similar challenges.
