India saw 12.3% drop in ‘extreme poverty’ during 2011-2019: World Bank

The extreme poverty in India declined by 12.3% between 2011 and 2019 but at a rate that is significantly lower than observed over the 2004-2011 period, a working paper released by the World Bank shows.

The World Bank's research paper, co-authored by economists Sutirtha Sinha Roy and Roy van der Weide, said the poverty headcount rate was 10.2% in 2019, down from 22.5% in 2011.

The rate of poverty reduction between 2004 and 2011 is estimated at around 2.55% per year, it said. After the year 2011, the poverty reduction slowed down. “By our estimates, poverty has declined by an average of 1.3 percentage points per year between 2011 and 2018,” it said.

The report, titled 'Poverty in India Has Declined over the Last Decade But Not As Much As Previously Thought', said during this period, reductions in rural areas were more pronounced than in urban areas. "Rural and urban poverty dropped by 14.7 and 7.9 percentage points during 2011-2019," it said.

Two crucial events -- demonetisation and economic slowdown in 2019 -- also led to a rise in urban poverty by 2 percentage points in 2016 (coinciding with the demonetisation event) and rural poverty rose by 10 basis points in 2019 (coinciding with a slowdown in the economy), the report highlighted.

There was a slight moderation in "consumption inequality" since 2011, the report said, adding the margin was smaller than reported in the unreleased NSS-2017 survey.

Also, the extent of poverty reduction during 2015-2019 is estimated to be lower than earlier projections, based on growth in private consumption expenditure reported in national account statistics.

The analysis was stopped just before the lockdown measures were imposed due to the first wave of Covid-19 in the country, and therefore any change in poverty headcounts after the pandemic was not analysed in the report.

The paper clarified the findings, interpretations, and conclusions expressed in it are entirely those of the authors. "They do not necessarily represent the views of the World Bank and its affiliated organisations or those of the executive directors of the World Bank or the governments they represent," it said.

Another interesting observation in the research paper was that during 2011-2019, farmers with small landholding sizes experienced higher income growth. "Real incomes for farmers with the smallest landholdings have grown by 10% in annualised terms between the two survey rounds, compared to a 2% growth for farmers with the largest landholding," the report said.

Notably, the government has not released a new household consumption survey since the National Sample Survey (NSS) in 2011. It's been a decade that the country has not released any official estimates of poverty and inequality.

The research paper sheds light on “how poverty and inequality” have evolved since 2011 using a new household panel survey, the Consumer Pyramids Household Survey conducted by a private data company.

This paper is a product of the Poverty and Equity Global Practice and the Development Research Group, Development Economics.

Besides, the International Monetary Fund (IMF), in its working paper released last week, had said the free foodgrain scheme, also named Pradhan Mantri Garib Kalyan Ann Yojana (PM-GKAY), had capped the extreme poverty by 0.86% in 2020 as India saw one of longest Covid-infused lockdowns in the world.