Inclusive Growth has led to Poverty Decline

The findings of the survey paint a picture of significant progress in poverty reduction and economic development in India. — Dr. Jaya Sharma

 

Bharat is currently experiencing the transformative phase of Amrit Kaal, and has already started showing promising signs. A notable development is the substantial reduction in poverty levels. The latest Household Consumption Expenditure Survey (HCES) conducted by the National Sample Survey Office (NSSO) reveals that poverty levels in India have fallen below 5%. This milestone, highlighted by the CEO of NITI Aayog, not only marks a significant statistical achievement but also symbolizes a substantial improvement in the quality of life for millions. This showcases a prosperous future, reshaping the socio-economic fabric of both rural and urban areas. On top of all 24.82 crore people have escaped from multidimensional poverty in Bharat in last nine years. Findings of NITI Aayog’s discussion paper ‘Multidimensional Poverty in India since 2005-06’ give credit for this remarkable achievement to significant initiatives of the government to address all dimensions of the poverty between 2013-14 to 2022-23.  

The Household Consumption Expenditure Survey (HCES) is a comprehensive study that aims to assess the economic well-being of households in India. The survey collects data on various aspects of household consumption, including food, non-food items, and services, to estimate the Monthly Per Capita Consumption Expenditure (MPCE). This data is crucial for understanding the living standards of different socio-economic groups and for formulating policies aimed at poverty alleviation and economic development.

Poverty estimation in India is carried out by a task force of the NITI Aayog through the calculation of poverty lines based on data collected by the National Sample Survey Office under the Ministry of Statistics and Programme Implementation (MOSPI). As per the panel’s definition, a person spending Rs 47 per day in cities and Rs. 32 in villages is below the poverty line.

The Multi-dimensional Poverty Index (MPI) is used by many countries as a tool to track progress in reducing poverty and to design more effective poverty alleviation policies. The Multidimensional Poverty Index (MPI) is a metric that measures poverty by considering multiple factors or dimensions that contribute to a person’s well-being. It goes beyond just income or monetary poverty and includes indicators such as access to education, healthcare, housing, and living standards. The MPI provides a more comprehensive understanding of poverty by capturing the various ways in which people can be deprived and is often used alongside income-based measures to create a fuller picture of poverty within a population.

Key Findings of the survey

The HCES findings underscore the progress India has made in reducing poverty and improving the economic well-being of its citizens.

1.    The bottom 5% of India’s rural population, ranked by MPCE, has an average MPCE of Rs. 1,373 while it is Rs. 2,001 for the same category of population in the urban areas. 

2.    The top 5% of India’s rural and urban population, ranked by MPCE, has an average MPCE of Rs. 10,501 and Rs. 20,824, respectively.

3.    Among the states, MPCE is the highest in Sikkim for both rural and urban areas (Rural – Rs. 7,731 and Urban – Rs. 12,105). It is the lowest in Chhattisgarh (Rural – Rs. 2,466 and Urban – Rs. 4,483). 

4.    The rural-urban difference in average MPCE, among the states is the highest in Meghalaya (83%) followed by Chhattisgarh (82%). 

5.    Among the UTs, MPCE is the highest in Chandigarh (Rural – Rs. 7,467 and Urban – Rs. 12,575), whereas, it is the lowest in Ladakh (Rs. 4,035) and Lakshadweep (Rs. 5,475) for rural and urban areas respectively.

The survey not only indicates a decrease in poverty but also highlights evolving consumption patterns, indicating a growing prosperity that is reshaping rural and urban lives alike. The survey’s results provide significant understanding into the economic health of Indian households, demonstrating positive trends in poverty alleviation and consumption patterns. The survey data, available on the Ministry’s website, indicates a significant increase in per capita monthly household consumption expenditure from 2011-12 to 2022-23, suggesting a rise in prosperity levels across the country.

Another key observations from the survey is the shift in spending patterns, particularly in terms of food expenditure. Rural households, for the first time, allocated less than 50 per cent of their total expenditure to food. It also claims that the urban-rural consumption divide has narrowed from 91% in 2004-05 to 71% in 2022-23, signifying a reduction in inequality.

The survey’s categorization of people into 20 different income groups highlights that poverty primarily persists in the 0-5 percent income bracket. This underscores the importance of targeted interventions to uplift the poorest sections of society and reduce income disparities. The shift in consumption patterns towards non-food items, as indicated by the survey, reflects an improvement in living standards and a rise in disposable incomes among Indian households. This shift signifies increased prosperity and changing lifestyle preferences among the populace.

Moreover, the narrowing gap between rural and urban consumption patterns suggests improved access to goods and services in rural areas, indicating progress towards economic parity between rural and urban populations. However, challenges remain in addressing poverty among the most vulnerable segments of society and ensuring sustainable economic growth. The survey’s findings also have implications for inflation and GDP calculations, highlighting the need to adjust the consumer price index to accurately reflect current consumption patterns. 

Positive Implications

The reduction in poverty in India holds significant potential for impacting the overall economy, living standards, and quality of life in the country. Economically, a decline in poverty translates to a larger consumer base with increased purchasing power, stimulating demand for goods and services and thereby driving economic growth. This shift can lead to improved living standards, as higher incomes enable people to afford better housing, healthcare, education, and nutrition. Consequently, there can be substantial improvements in health and education outcomes, as increased access to healthcare and education empowers individuals to lead healthier and more productive lives. Additionally, the reduction in poverty can enhance the quality of life by reducing financial stress, improving access to basic amenities and services, and fostering a sense of dignity and empowerment among the populace. 

Socially, a decrease in poverty can promote greater social cohesion and stability, as more people have access to resources and opportunities, reducing the likelihood of social unrest and conflict. In essence, the reduction in poverty in India has the potential to create a more inclusive, prosperous, and harmonious society, benefiting individuals, families, and the nation as a whole.

Conclusion

The findings of the survey paint a picture of significant progress in poverty reduction and economic development in India. The decline in poverty levels to just five percent is a testament to the effectiveness of various government initiatives and policies aimed at improving the lives of the poor. The shift in consumption patterns towards non-food items and the narrowing gap between rural and urban consumption indicate a growing prosperity and a more balanced economic growth. However, challenges remain, particularly in ensuring that the benefits of economic growth are distributed equitably and reach the most vulnerable sections of society. Continued efforts to address these challenges, along with a focus on sustainable development, will be crucial in maintaining and building upon the progress achieved so far.            

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