Is India winning the war on poverty?

Image source, AFP

Image caption, India's poverty levels have been declining
  • Author, Soutik Biswas
  • Role, India correspondent

Is India winning the battle against poverty? Going by the latest figures, yes.

The number of Indians living in extreme poverty has fallen from 37% to 22% in the past seven years,

The good news is that poverty in large swathes of dirt-poor northern India - states like Bihar, Madhya Pradesh, Orissa and Uttar Pradesh, which have been considered a drag on India's development - has fallen sharply.

Today there are more people living in extreme poverty in the economically prosperous western state of Gujarat (16.63%) than in the traditional northern laggard Rajasthan (14.71%).

In eastern Orissa, which had the highest number of poor in 2004, poverty levels have nearly halved.

Economists like YK Alagh say the latest data are significant and show a "rapid decline" in poverty.

Dr Alagh says this is because of various factors:

  • Overall growth (8.2% annually between 2004-2005 and 2011-12, , before slipping to 5% later)
  • An increase in farm growth (3.5% annually at the moment, up from under 2% in the 1990s)
  • More jobs

But sceptics believe the new data are flawed since they are based on India's contentious definition of the term "poor"- anyone earning fewer than 32 rupees (55 cents, 35 pence) in urban areas and 27 rupees (45 cents, 30 pence) in rural areas is counted as a person living below the poverty line.

The four-decade-old "official poverty line"', which has been updated over the years, is essentially based on the minimum calories consumed by a person.

But food consumption patterns have changed, people's aspirations have grown and therefore the definition of extreme poverty has altered.

The government expects to announce a new threshold next year, which according to economist C Rangarajan will .

"We definitely need to come up with a new, updated poverty line based on current realities," agrees Dr Alagh.

The new data will help the beleaguered Congress Party-led government, which has come under vicious attack from its critics for , high inflation, a precarious , blocked projects and a splurge on social welfare despite falling revenues (a law to provide cheap food to two thirds of the population is the latest scheme).

Despite the good tidings, India's war on poverty is far from over.

Remember, 270m Indians still live in extreme poverty. That is one in five Indians.