India winning the battle against extreme poverty

It is a distinction that no country wants: the place with the most people living in extreme poverty. Extreme poverty is defined as living on less than $1.90 a day.

For decades, India remained stubbornly in the top spot, a reflection of its huge population and its enduring struggle against poverty. But that distinction of poverty in India continues to decrease.

India, with its population of 1.3 billion people, now has just over 5 percent of its population living in extreme poverty, according to the World Poverty Clock. And the World Poverty Clock researchers suggests that by 2021, fewer than 3 percent of India’s population will live in extreme poverty, a benchmark viewed by some development economists as “a watershed moment.”

However, “the claims that India is on the verge of winning the battle against extreme poverty sit uneasily with the current concerns about job creation or rural distress,” said an editorial last week in Mint, a financial newspaper in India.

Part of the disconnect may be the result of how poverty is defined. The extreme poverty threshold is an absolute measure used for international comparison. Last year, however, the World Bank added another benchmark that aims to capture a sense of relative poverty. For “lower middle income” countries like India, it set the line at people who live on $3.20 day. By that measure, a third of Indians are poor, economist Surjit Bhalla estimated.

More clarity could be only months away. In June, the Indian government completed a national survey which is conducted once every five years and provides the best available data on poverty. Bhalla, an economist who also serves as a part-time adviser to the Indian government, believes that the country’s own data could show it made even more progress reducing poverty than the estimates produced by Brookings and the World Poverty Clock.

[Washington Post]