Poverty in India is on rise again

Synopsis 

During the 2000’s there was decline in poverty as was indicated by the Government data. However, now multiple data point to a rise in poverty and unemployment. 

Context 

Source: The Hindu

• Consumption expenditure survey (CES) is conducted and released every 5 years by NSO 
• 2017-2018 data was not released, and the next set will be released in 2022. 
• But based on the recent NSO’s PLFS (periodic labour force survey), the unemployment rate has reached a 45-year high and also the poverty levels.

Measurement of Poverty 

• Prior to 2011, PLFS (periodic labour force survey) data was also used to estimate poverty. 
• Household monthly per capita expenditure data was also collected based on Mixed Recall Period methodology. 
• In 2011, the government decided to raise the poverty line as per the recommendations of the Tendulkar committee. 

Rise in poverty figures 

• In absence of CES data, PLFS data can be used to estimate poverty. 
• NSO’s CES data 2017 (leaked) showed that rural consumption had fallen by 8% and since over 65% of the population is rural, poverty is estimated to be increased. 
• The absolute number of poor had risen from 217 Mn(2012) to 270 Mn(2019). (first time since history of CES) 

Reasons for increased poverty 

• Demonetization and GST reforms struck a heavy blow to the unorganized sector & MSME. 
• Household savings declined, Private investment fell from 31% to 28% 
• Public expenditure was constrained by fiscal consolidation 
• Exports fell, in absolute terms 
• There was a rise in unemployment and real wages did not increase. 

Terms to know:

• Periodic Labour Force Survey