Poverty in India is increasing again

India’s Consumption Expenditure Survey (CES) is conducted by National Sample Survey Office every five years. But, CES data has not been released since 2011-2012. But there are clear indications that, Poverty in India is on rise again.

Key facts

• CES was conducted in 2017-18 (late by a year) but was not made public by Government of India.
• Now a new CES is likely to be conducted in 2021-22 for which data will be available by end of 2022.

How rise in poverty was estimated?

Indian economy has been slowing for nine quarters prior to outbreak of covid-19 pandemic. NSO’s Periodic Labour Force Survey shows that, unemployment had increased to 45-year high in 2017-18. Further, there is a clear trajectory of falling poverty from 1973 to 2012. Since India started collecting data on poverty, incidence of poverty has always fallen. As per Lakdawala Poverty line, Poverty was 54.9% in 1973-74, 44.5% in 1983-84, 36% in 1993-94 and reached to 27.5% in 2004-05.

Methodology of estimating poverty

Planning Commission decided to raise poverty line in accordance with the Suresh Tendulkar Committee recommendations in 2011. Based on Tendulkar poverty line, poverty estimates for 2004-05 and 2011-12 are to be found in estimates of Planning Commission using the CES of those years. Thus, 2011-12 poverty line was extended for each state and used consumption expenditure reported by PLFS to estimate poverty head count ratio (incidence of poverty in population) and absolute number of poor. PLFS can be used to estimate incidence of poverty because it collects the household monthly per capita consumption expenditure data on the basis of Mixed Recall Period methodology.

How poverty is rising?

There has been a rise in incidence of poverty since 2011-12 in consistent with the leaked NSO’s CES data for 2017-18. As per the leaked data, rural consumption between 2012 and 2018 had decreased by 8%, while urban consumption had increased by 2%. By 2019-20, poverty had increased in the rural as well as urban areas. Rural areas witnessed highest increase from 25% to 30%.

Month: Current Affairs - August, 2021