World Bank estimates show fall in India’s poverty rate

12.8 per cent of the global population live in extreme poverty

October 06, 2015 01:32 am | Updated December 04, 2021 11:29 pm IST - NEW DELHI:

The World Bank has revised the global poverty line, previously pegged at $1.25 a day to $1.90 a day (approximately Rs. 130). This has been arrived at based on an average of the national poverty lines of 15 poorest economies of the world. The poverty lines were converted from local currency into U.S. dollars using the new 2011 Purchasing Power Parity (PPP) data.

In its latest report ‘Ending Extreme Poverty, Sharing Prosperity: Progress and Policies’, authors Marcio Cruz, James Foster, Bryce Quillin, and Phillip Schellekkens, note that world-wide poverty has shown a decline under these new estimates.

The latest headline estimate for 2012 based on the new data suggests that close to 900 million people (12.8 per cent of the global population) lived in extreme poverty.

With the Sustainable Development Goals adopted in September, seeking to end all forms of poverty world over, the World Bank Group has set itself the target of bringing down the number of people living in extreme poverty to less than 3 per cent of the world population by 2030.

Multi-dimensional poverty

The report also notes that the global poverty line does not currently take the multiple dimensions of poverty into account. There are many non-monetary indicators — on education, health, sanitation, water, electricity, etc. — that are extremely important for understanding the many dimensions of poverty that people experience.

The 2015 Multidimensional Poverty Index (MPI) counts 1.6 billion people as multi-dimensionally poor, with the largest global share in South Asia and the highest intensity in Sub-Saharan Africa.

These multiple indicators are an important complement to monetary measures of poverty and are crucial to effectively improving the lives of the poorest, the report notes. However, the recently-established Commission on Global Poverty is currently assessing how we measure and understand poverty and how to improve this going forward. According to a WB spokesperson, the CGP recommendations are expected in April 2016.

India poverty figures varies with method

Though home to the largest number of poor in 2012, India's poverty rate is one of the lowest among those countries with the largest number of poor, the latest World Bank report notes. Also in the case of India, with large numbers of people clustered close to the poverty line, poverty estimates are significantly different depending on the recall period in the survey, the authors note.

Since 2015 is the target year for the Millennium Development Goals, the assessment of changes in poverty over time is best based on the Uniform Reference Period (URP) consumption method, which uses a 30-day recall period for calculating consumption expenditures, as per the report. This method, used to set the baseline poverty rates for India in 1990, shows India’s poverty rate for 2011/12 to be 21.2 per cent.

By comparison, the Modified Mixed Reference Period (MMRP), which contains a shorter, seven-day recall period for some food items leads to higher estimates of consumption and therefore lower poverty estimates. “We expect that the MMRP-based estimate (currently at 12.4% for India) will set the baseline for India and global poverty estimates, going forward,” a World Bank spokesperson told The Hindu .

More country specific details will be available once the Global Monitoring Report, using the new estimates, is launched in Washington DC on October 7.

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