India has brought down the number of people living below $1 a day by 2 percentage points to 24.3 per cent in three years up to 2005, as Asia’s third-largest economy accelerated to 7 per cent plus growth in those years, latest data from the World Bank revealed.
In absolute numbers, 9.6 million people came out of poverty between 2002 and 2005, the largest reduction between two consecutive surveys released by the World Bank since 1981.
If $1.25 per day is taken as a benchmark for defining the poverty line, then 4.7 million came out of poverty in this period.
Since the data reported by the World Bank have a time lag of three years, the effect of increase in food and commodity prices which disproportionately affect the poor
in the last two years is not known.
Also, the World Bank now says it has upwardly adjusted the cost of living in developing countries to $1.25 per day against $1 per day.
The poverty line of $1.25 is the average poverty line found in the poorest 10-20 countries, the World Bank said in a press statement.
The new study suggested the number of people below the poverty line would have increased by 400 million in three years to 1,399.8 million in 2005 (at $1.25 per day), against 1,090.2 million (at $1 per day) in 2002.
If similar comparison were adopted for India, the number of people in poverty would have increased by 179.1 million between 2002 and 2005. In percentage terms, it would be 41.6 per cent as on 2005 as against 26.3 per cent in 2002.
The difference between India’s own estimate of poverty and the World Bank’s one is because of a difference in how the poverty line is calculated.
The World Bank’s calculation is based on the average of the poorest countries, whereas India’s estimate is based on how much money is required for an individual to have ideal intake of daily food and expenditure on shelter and other necessities.
If India’s poverty line is translated in Purchasing Power Parity (PPP) terms, it is $ 1.02 per day.
“High GDP (Gross Domestic Product) growth in India has reduced poverty. However, to achieve a higher rate of poverty reduction, India will also need to address inequalities in opportunities that impede the poor from participating in the growth process,” the World Bank said.