Poverty, the condition of lacking sufficient income or essential material possessions like food, clothing, and shelter to meet basic needs, remains a formidable social and economic challenge in India, despite the country's economic growth. India employs the Tendulkar methodology, developed by the Planning Commission, to measure poverty. This method focuses on assessing poverty based on consumption or spending over a specific period, with each Indian State establishing its own poverty threshold to determine the population living below the poverty line.
The COVID-19 pandemic delivered India's economy a severe blow, the worst since gaining independence. In 2017, the World Bank estimated that over 20 percent of India's population lived in extreme poverty, defined as subsisting on less than $1.90 USD per day. Although the stock market rebounded by over 75 percent in the past year, leading to increased employment and economic development, a significant portion of India's middle class slipped below the poverty threshold. Simultaneously, those already living in poverty found themselves pushed into extreme poverty due to the economic downturn. In stark contrast, the wealthy grew wealthier during the pandemic, exacerbating India's existing inequality problem.
There exists a correlation in India between increasing inequality, measured by the Gini coefficient, and economic development since gaining independence. Since the 1990s, the number of people living below the poverty line has nearly halved, thanks to economic growth and a higher GDP.
In 2021, India was projected to reach a GDP per capita of just over $11,900 USD, while the average national income per capita stood at approximately $10,560 USD. This represented a significant increase compared to 2010, with an average GDP of $7,700 USD and an average national income of around $6,600 USD. In general, India's GDP and national income have been on a steady upward trajectory since 2010, except for 2020, which was likely impacted by the COVID-19 pandemic.
One noteworthy departure from conventional wealth estimates is the report's focus on income distribution for the periods of 2017-18, 2018-19, and 2019-20. This novel approach aims to understand the flow of capital and highlights that wealth concentration alone doesn't reveal changes in household purchasing power. Extrapolating data from Periodic Labour Force Survey (PLFS) 2019-20 reveals that a monthly income of Rs 25,000 places an individual among the top 10% of earners, indicating some degree of income disparity. The top 1% of earners account for 6-7% of total income, while the top 10% collectively garner a third of all income. In 2019-20, self-employed workers comprised the largest percentage of employment categories at 45.78%, followed by regular salaried workers at 33.5% and casual workers at 20.71%. Interestingly, self-employed workers dominate the lower income categories. The unemployment rate in the country stood at 4.8% in 2019-20, with a worker population ratio of 46.8%.
In terms of health infrastructure, significant strides have been made in expanding capacity, particularly in rural areas. From 172,608 total health centres in India in 2005, the count had risen to 185,505 by 2020. Several States, including Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Tamil Nadu, and Chandigarh, and a few Union Territories have made substantial investments in health centres (including sub-centres, primary health centres, and community health centres) between 2005 and 2020. However, data from NFHS-4 (2015-16) and NFHS-5 (2019-21) express a nutritional concern, including issues of overweight, underweight, and the prevalence of anaemia (especially in children, adolescent girls, and pregnant women), remaining pressing problems requiring immediate attention. Furthermore, low health coverage resulting in high out-of-pocket expenditure directly impacts poverty rates.
Mitigating inequality in access to education and skill development among genders, scheduled caste/scheduled tribe populations, and minority communities is also a critical priority. If the current trend of rising inequality in India is not addressed through appropriate policy measures, it could exacerbate existing poverty levels.
(Dr Tripathy, who lives in Brahmapur, is a former Professor of Economics, Gokhale Institute of Politics and Economics, Pune)