Poverty Profile
Poverty imposes an oppressive weight on
India, especially in the rural areas where almost three out of four Indians and
77 percent of the Indian poor live. Although poverty has been reduced during
the past four decades, it remains painfully high.
Because of India's rapid population growth rate, even that advance, however, has not been sufficient to reduce the absolute number of poor, which increased from around 200 million in the 1950s to 312 million in 1993-94 (most recent Five Year Survey). This leaves India with the largest concentration of poor people in the world, particularly in the villages — fewer than 5,000 people — where 60 percent of all Indians live. Staggering as the overall numbers remain — 240 million rural poor and 72 million urban poor — they do not tell the full story of change. Social indicators of well-being, for instance, record a history of progress that has, like the decline of poverty itself, been steady but slow.
Among those indicators, three illustrate this point. Infant mortality rates, as one example, fell from 146 deaths per thousand births in the 1950s to 80 at the start of this decade. Nevertheless, the Indian rate is still high and two Indian states, Orissa (124 per thousand in 1991) and Madhya Pradesh (117 per thousand in 1991), even recorded proportionally more infant deaths than the sub-Saharan average (104 per thousand in 1991). Life expectancy at birth, now twice the 30 years that was the Indian average in 1947, remains well below that of China (69 years.) Adult literacy rates for Indian males (64 percent) and for females (39 percent) in 1991 were almost identical to those for sub-Saharan Africa and far behind those in China — 96 percent for men, 85 percent for women — ten years earlier.
What is poverty? In India, poverty is officially linked to a nutritional baseline measured in calories (food-energy method). The Planning Commission defines poverty lines as a per capita monthly expenditure of Rs. 49 for the rural areas and Rs. 57 in urban areas at 1973-74 all-India prices. These poverty lines correspond to a total household per capita expenditure sufficient to provide, in addition to basic non-food items — clothing, transport — a daily intake of 2400 calories per person in rural areas and 2100 in urban areas. Individuals who do not meet these calorie norms fall below the poverty line.
Evolution of Poverty in India. A recent World Bank research project assembled and analyzed 35 rounds of the National Sample Survey Organization household survey, covering a period from 1951 to 1993-94. These national household surveys are suitable for tracking the poor's living conditions since the consumption data that have been collected in these surveys are reasonably comparable.
The most recent (1993-94) household survey conducted by the National Sample Survey Organization and based on the poverty lines calculated by the World Bank, reveals that 36.7 percent of India's rural population and 30.5 percent of its city-dwellers lived in poverty–a national average of 35.0 percent. What is important is that as average Indian living standards rose during the 40 years since 1951 and particularly after the mid-1970s, the poor did not get poorer.
The magnitude of decline in poverty of the last two decades is significant but not dramatic. While the decline of poverty since the early 1970s has been sizable (from an incidence of 56 percent to 35 percent in 1993-94), India's progress in fighting poverty has been modest when compared with some of its Asian neighbors. Between 1970 and 1993, for example, the proportion of Indonesia's population living in poverty dropped from 58 to 8 percent, an annual decline of nearly 10 percent.
As of 1993-94, India's poverty continues to be predominantly rural although rural poverty declined faster than urban poverty over 1951-88. Moreover, the decline in national poverty seems to have been driven mostly by the decline in rural poverty — not surprising given that 74 percent of India's population lives in rural areas. Many studies suggest that the poor perceive themselves to be better off now than in previous decades. However, these studies also point to pockets of increasing impoverishment.
Who are the poor? Factors such as population density, ecological conditions and the availability of irrigation and transport account for some of these differences among India's states and even within them. Other conditions affecting the rural poor —gender, literacy, land ownership, employment status, and caste — create a more consistent pattern. Thus, an illiterate rural woman, a member of a scheduled tribe or caste, a person living in a landless household or dependent on wage earnings, all face a significantly higher than average risk of poverty.
The incidence of poverty was highest of all among the landless wage-earners who provide largely unskilled labor in markets where the prevalence of long-term contracts has been declining and wages remain too low to lift casual laborers from the bottom rungs of the ladder. Again, rural female laborers are more likely than men to depend on daily wages from manual employment. For every hundred women thus employed, there are only 85 males earning their living in the same, marginal way, even though men outnumber women in India by a ratio of 1000 to 929. In terms of earning power, men are more than twice as likely as women to hold salaried jobs in the large and medium-sized towns that are increasingly important centers of economic life in the Indian countryside.
While economic inequality — as measured by the Gini coefficient — within regions varies little from the poorest regions to the more fortunate, the Gini coefficient does not capture the gender and social inequalities that persist in India. These inequalities severely constrain the extent to which certain groups in the population are able to participate in and benefit from the process of economic growth.
Because of India's rapid population growth rate, even that advance, however, has not been sufficient to reduce the absolute number of poor, which increased from around 200 million in the 1950s to 312 million in 1993-94 (most recent Five Year Survey). This leaves India with the largest concentration of poor people in the world, particularly in the villages — fewer than 5,000 people — where 60 percent of all Indians live. Staggering as the overall numbers remain — 240 million rural poor and 72 million urban poor — they do not tell the full story of change. Social indicators of well-being, for instance, record a history of progress that has, like the decline of poverty itself, been steady but slow.
Among those indicators, three illustrate this point. Infant mortality rates, as one example, fell from 146 deaths per thousand births in the 1950s to 80 at the start of this decade. Nevertheless, the Indian rate is still high and two Indian states, Orissa (124 per thousand in 1991) and Madhya Pradesh (117 per thousand in 1991), even recorded proportionally more infant deaths than the sub-Saharan average (104 per thousand in 1991). Life expectancy at birth, now twice the 30 years that was the Indian average in 1947, remains well below that of China (69 years.) Adult literacy rates for Indian males (64 percent) and for females (39 percent) in 1991 were almost identical to those for sub-Saharan Africa and far behind those in China — 96 percent for men, 85 percent for women — ten years earlier.
What is poverty? In India, poverty is officially linked to a nutritional baseline measured in calories (food-energy method). The Planning Commission defines poverty lines as a per capita monthly expenditure of Rs. 49 for the rural areas and Rs. 57 in urban areas at 1973-74 all-India prices. These poverty lines correspond to a total household per capita expenditure sufficient to provide, in addition to basic non-food items — clothing, transport — a daily intake of 2400 calories per person in rural areas and 2100 in urban areas. Individuals who do not meet these calorie norms fall below the poverty line.
Evolution of Poverty in India. A recent World Bank research project assembled and analyzed 35 rounds of the National Sample Survey Organization household survey, covering a period from 1951 to 1993-94. These national household surveys are suitable for tracking the poor's living conditions since the consumption data that have been collected in these surveys are reasonably comparable.
The most recent (1993-94) household survey conducted by the National Sample Survey Organization and based on the poverty lines calculated by the World Bank, reveals that 36.7 percent of India's rural population and 30.5 percent of its city-dwellers lived in poverty–a national average of 35.0 percent. What is important is that as average Indian living standards rose during the 40 years since 1951 and particularly after the mid-1970s, the poor did not get poorer.
The magnitude of decline in poverty of the last two decades is significant but not dramatic. While the decline of poverty since the early 1970s has been sizable (from an incidence of 56 percent to 35 percent in 1993-94), India's progress in fighting poverty has been modest when compared with some of its Asian neighbors. Between 1970 and 1993, for example, the proportion of Indonesia's population living in poverty dropped from 58 to 8 percent, an annual decline of nearly 10 percent.
As of 1993-94, India's poverty continues to be predominantly rural although rural poverty declined faster than urban poverty over 1951-88. Moreover, the decline in national poverty seems to have been driven mostly by the decline in rural poverty — not surprising given that 74 percent of India's population lives in rural areas. Many studies suggest that the poor perceive themselves to be better off now than in previous decades. However, these studies also point to pockets of increasing impoverishment.
Who are the poor? Factors such as population density, ecological conditions and the availability of irrigation and transport account for some of these differences among India's states and even within them. Other conditions affecting the rural poor —gender, literacy, land ownership, employment status, and caste — create a more consistent pattern. Thus, an illiterate rural woman, a member of a scheduled tribe or caste, a person living in a landless household or dependent on wage earnings, all face a significantly higher than average risk of poverty.
The incidence of poverty was highest of all among the landless wage-earners who provide largely unskilled labor in markets where the prevalence of long-term contracts has been declining and wages remain too low to lift casual laborers from the bottom rungs of the ladder. Again, rural female laborers are more likely than men to depend on daily wages from manual employment. For every hundred women thus employed, there are only 85 males earning their living in the same, marginal way, even though men outnumber women in India by a ratio of 1000 to 929. In terms of earning power, men are more than twice as likely as women to hold salaried jobs in the large and medium-sized towns that are increasingly important centers of economic life in the Indian countryside.
While economic inequality — as measured by the Gini coefficient — within regions varies little from the poorest regions to the more fortunate, the Gini coefficient does not capture the gender and social inequalities that persist in India. These inequalities severely constrain the extent to which certain groups in the population are able to participate in and benefit from the process of economic growth.
- Varun Garg
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