There are many of economic, political and social indicators of development, ranging from ‘Hard’ economic indicators such as Gross National Income (and all its variations), to various poverty and economic inequality indicators, to the Sustainable Development Goals, which focus much more on social indicators of development such as education and health, all the way down to much more subjective development indicators such as happiness. Amongst these one indicator alone does not help us understand the complete economic scenario of a particular country. Compilation and study of some or all of these indicators will give you a clearer idea about the economic development of the country.
INDICATOR STUDIED: The Percentage of People Living on Less than $1.25 a day (poverty)
There are still around 800 million people around the world living on less than $1.25 a day (PPP), the figures for some of these countries are below:
? The Democratic Republic of Congo (88%)
? Bangladesh (47%)
? India (26%)
? China (6%)
Looking at absolute poverty statistics like this gives us a much fuller understanding of the lack of development in certain countries – in DRC, you can clearly see that poverty is endemic (absolute poverty is a significant problem in many Sub-Saharan African countries), and we can also see that absolute poverty is still a significant problem in India (mainly rural India) and while the 6% is quite low in China, this 6% represents 10s of millions of people, given the large overall population size.
COMPARATIVE STUDY OF INDIA AND CHINA
? NOTE: though it is The Democratic Republic of Congo (88%) and china (6%) that lie in the two extremes of the table, comparison with India is more accurate considering the relatively large population in both the countries (China is the most populous country with approximately 1.42 billion people in 2018. India is second largest country by population with approximately 1.35 billion inhabitants in 2018.)
POVERTY IN INDIA
Poverty is a significant issue in India, despite being one of the fastest-growing economies in the world, clocked at a growth rate of 7.11% in 2015, and a sizable consumer economy. The World Bank reviewed and proposed revisions on May 2014, to its poverty calculation methodology and purchasing power parity basis for measuring poverty worldwide. According to this revised methodology, the world had 872.3 million people below the new poverty line, of which 179.6 million people lived in India. In other words, India with 17.5% of total world’s population, had 20.6% share of world’s poorest in 2011. As of 2014, 58% of the total population were living on less than $3.10 per day.3 According to the Modified Mixed Reference Period (MMRP) concept proposed by World Bank in 2015, India’s poverty rate for period 2011-12 stood at 12.4% of the total population, or about 172 million people; taking the revised poverty line as $1.25.
India Poverty rate since 1993 based on World Bank $1.99 PPP poverty line.
The World Bank has been revising its definition and benchmarks to measure up poverty since 1990, with a $1.25 per day income on purchasing power parity basis as the definition in use from 2005 to 2013. Some semi-economic and non-economic indices have also been proposed to measure poverty in India; for example, the Multi-dimensional Poverty Index placed 33% weight on number of years spent in school and education and 6.25% weight on financial condition of a person, in order to determine if that a person is poor.
From late 19th century through early 20th century, under British colonial rule, poverty in India intensified, peaking in the 1920s. Famines and diseases killed millions each time. After India gained its independence in 1947, mass deaths from famines were prevented. Rapid economic growth since 1991, has led to sharp reductions in extreme poverties in India. However, those above poverty line live a fragile economic life. As per the methodology of the Suresh Tendulkar Committee report, the population below the poverty line in India in 2009-2010 was 354 million (29.6% of the population) and that in 2011-2012 was 269 million (21.9% of the population). The Rangarajan Committee said in 2014 that the population below the poverty line in 2009-2010 was 454 million (38.2% of the population) and that in 2011-2012 was 363 million (29.5% of the population). Deutsche Bank Research estimated that there are nearly 300 million people who are middle class. If former trends continue, India’s share of world GDP will significantly increase from 7.3% in 2016 to 8.5% by 2020. In 2015, around 170 million people, or 12.4%, lived in poverty (defined as $1.99 (Rs 123.5)), a reduction from 29.8% in 2009.
Approximately 763 million people in India were living below this poverty line in 2011.
Each state in India has its own poverty threshold to determine how many people are below its poverty line and to reflect regional economic conditions. These differences in definition yield a complex and conflicting picture about poverty in India, both internally and when compared to other developing countries of the world.
Economic impact of British imperialism
Warren Hastings and the East India Company were accused of charges including mismanagement of the Indian economy. Contemporary historian Rajat Kanta Ray argues the economy established by the British in the 18th century was a form of plunder and a catastrophe for the traditional economy of Mughal India, depleting food and money stocks and imposing high taxes that helped cause the famine of 1770, which killed a third of the people of Bengal.
Reduction in poverty
One of the main reasons for record decline in poverty is India’s rapid economic growth rate since 1991. Another reason proposed is India’s launch of social welfare programs such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Midday Meal Scheme in government schools. Klonner and Oldiges, in a 2012 study, conclude that MGNREGA helps reduce rural poverty gap (intensity of rural poverty) and seasonal poverty, but not overall poverty. However, there is a disturbing side, as deprivation has tended to increase, and that too among the most deprived sections. According to the latest statistics published by the Census of India, among scheduled tribes 44.7% of people were farmers working on their own land in 2001; however, this number came down to 34.5% in 2011. Among scheduled castes this number declined from 20% to 14.8% during the same period. This data is corroborated by other data from the census, according to which the number of people who were working not on their own land but on others’ land (landless laborers), increased from 36.9% in 2001 to 44.4% among scheduled castes SC and from 45.6% to 45.9% among scheduled tribes.
Types of poverty
At the regional level, the marginality of central and eastern India is explained largely by adverse agrarian relations. Poverty has persisted in these areas though there are good endowment of natural resources and a relatively strong focus of Indian development planning on “backward areas”. It was estimated in previous reports that more than seventy per cent of India’s poor population reside in six states that include Uttar Pradesh, Bihar, Madhya Pradesh, Maharashtra, West Bengal and Orissa Uttaranchal, Jharkhand and Chattisgarh. In four of these states, Bihar, Orissa, Madhya Pradesh and Uttar Pradesh, and Assam there is high levels of poverty (Mehta and Shah 2003).
Rural vs urban
It is clear from various surveys and poverty reports that Most of the rural population in India and in other developing countries is living in deprived way because they do not own assets like land, they work as agricultural labourers, get insufficient and insecure employment and less salary. Degrees of inaccessibility, development stage of the region, low level of social capital are major correlative aspects that causes rural poverty. Though small farmers having some access to land, but they are dependent on unpredictable natural conditions, markets and chances of income generation. Poverty in rural India also has dimensions of caste, ethnicity and gender. Scheduled Castes and Scheduled Tribes of India’s rural areas are the poorest people that constitute about 40 to 50 percent of its population. When assessing the urban poverty in India, it is also a major worry for policy makers and researchers as number of poor is increasing due to fast urbanization. The Urban Poverty Report 2009 has shown that India has entered the Eleventh Plan period with an impressive record of economic growth. However, the incidence of decline of urban poverty has not augmented with GDP growth. In fact, urban poverty will become a major challenge for politicians in India as the urban population is growing which leads to urban poverty. The poverty rates as estimated in, “the MRP-consumption distribution data of the 61st Round are 21.8 percent in the rural areas, 21.7 percent in the urban areas and 21.8 percent for the country as a whole” (Poverty Estimates For 2004-05 2007:2).
Effects of poverty
There have numerous efforts been made by government to alleviate poverty. Poverty is inter-related to other problems of underdevelopment. In rural and urban societies, the nature of poverty can be very different. In urban areas, people often have access to health and education but more the problems faced by people due to poverty like overcrowding, unsanitary conditions, pollution, insecure houses. When appraising the factors lead to rural poverty, it is found that there is often less access to education, health and many other services but people usually live in healthier and safer environments. Since the mitigation of poverty is major aim of development work, it is necessary to understand the way to measure poverty. Development means that there has been some improvement and improvements must be measurable. Government expenditure in India is divided into non-development and development spending, and the latter is further subdivided into spending on social and economic services. Social services include health, labour, social welfare and other community services, while economic services include such sectors as agriculture, industry, trade and transportation.
Poverty and employment issue:
It is a major issue in country like India. In the presence of inadequate subsidies and low levels of wealth, joblessness will be correlated with high degrees of poverty. However, employment alone may not assure a non-poor status. In India, majority of people do not get high salary to buy the minimum consumption products. It is vital for policy maker to comprehend that whether poverty is a result of a lack of employment opportunities, or due to low wages. If all employed persons get sufficient wages to live above the poverty line but not all persons are employed, the mandatory approach is one of employment generating policies. If people are employed but have low productivity and earn low incomes, then the policy prescription is one of increasing the productivity of labour. In India, the actual poverty calculation is done as the consumption of the entire household is obtained and divided by the household size. This gives the per capita consumption in the household.