Global poverty dips but India stays poor

The World Bank’s report on global poverty, which has just been released, has some good news. But it is not so good, though not entirely bad, for India, which has traditionally ranked among the world’s poorest countries. The report has also stirred a debate about the methodology used to compute the poverty figures. This is not surprising because there never has been a poverty computation without contestation. The most important highlight of the report is that global poverty has steadily fallen over the past 25 years. The proportion of people living below the poverty line is set to decline from 12.6 per cent in 2012 to 9.6 per cent in 2015. This is important, because it is for the first time in history that the percentage is falling below 10. The decline is considered to be result of faster economic development all over the world since 1990. It has remained largely unaffected by the slowdown since 2008. But the major credit for the good figures would go China, which has lifted the largest number of people out of poverty in the shortest span of time in the recent past.

India may not have done too badly, with a sizeable reduction in the number people living in extreme poverty. But poverty is now concentrated in South Asia and sub-Saharan Africa. Over one-third of the world’s poor live in South Asia, and India has the largest number of them. Large variations among different regions and states continue, and inequalities have widened. Greater inequality means reduced participation by the poor in growth and a falling share of income growth. The situation is worse when poverty is measured not just in terms of income but other parameters like health and education. It is now accepted that poverty has to be measured by these factors too.

The World Bank has now revised its poverty line from $1.25 per day to $1.90 so that it reflects the present situation better. It is likely that the poverty level in India may be about 12.4 per cent by this standard, and the report says it might actually be lower. But the change in method-ology in measuring poverty, with a modification in the period of reference, is controversial. There is even a view that the figures of the fall in poverty, as suggested by the Bank, may not be completely real and actual, though there is some success in reducing absolute poverty. The message is that the challenge of poverty alleviation is as hard as it was in the past.