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India’s success in eliminating poverty has been even greater than many believed

James Crabtree, well-known author and journalist, whose book ‘The Billionaire Raj’ has been released this month has written a column in the Nikkei Asian Review titled ‘India’s post-poverty challenge’. In the article, he discusses India’s remarkable progress in curbing poverty and the road ahead.

Crabtree starts with a chart published recently with actual data from the World Bank, IMF, World Population prospects by the UN and other socio-economic indicator tools developed by research foundations. The chart shows India’s extraordinary progress in bringing down poverty of its people.

courtesy; James Crabtree/ Brookings.edu

The chart shows India’s progress in bringing poverty down over the last few years. From a significantly high 125 million people in 2016 to less than 75 million in 2018. Taking the applied parameters and projected trends into account, the chart forecasts that India’s poverty rate will continue to fall drastically. By the year 2022, it is expected to come under 20 million and eventually disappearing in a few more years.

For poverty, the world bank data use the standard income of less than 1.90 dollars a day as the parameter. It was accepted as the minimum amount in the most of the poor countries for the basic requirement of food, clothing and shelter. Crabtree goes ahead to emphasize that in less than a decade India has brought down the poverty headcount from 270 million to 75 million which is very significant. He suggested that though economists like Jagdish Bhagwati have long extolled India’s poverty reduction record after the economic reforms of 1991, India’s present performance is even better than what Bhagwati had estimated.

Crabtree adds further that according to latest data, Nigeria has now overtaken India as the country with world’s largest number of poor. Going by the data, Congo is soon expected to take the second place, pushing India to the third position. He asserts that as per almost all estimates, extreme poverty is soon going to be confined to Africa.

Crabtree gives partial credit to certain measures taken by previous governments. He adds that the National Rural Employment Guarantee Scheme (NREGA), though often criticised for lack of proper implementation and inefficiency, has helped in providing basic employment for a massive number of poor. Though NREGA is a burden in India’s budget, the last budget allowing a massive 7 billion USD to be spent on the scheme, it provided employment to 51 million households. He adds that basic employment schemes, combined with other state-sponsored programs have played a significant role in bringing poverty down. Though, from the graph it is also evident that poverty reduction since 2016 has been accelerated and is expected to decrease even further by 2022 given the current trend.

He states that the trickle-down effect of India’s rapid economic growth is as effective in poverty reduction as government schemes. World Bank data shows that average income per head in purchasing power parity terms has risen from 1140 USD in 1991 to 6490 USD in 2017, keeping India firmly now in ranks of middle-income countries.

Crabtree adds some words of caution with respect to the population which has just escaped the absolute poverty mark. He states that with ignorance and lack of healthcare, they still face the risk of falling back into poverty. He discusses that in a deeper sense unless a matchable rate of progress is made in other human development parameters, like maternal health, infant mortality and other such factors, the poverty reduction might not be as effective as it looks now.

He expresses concern about the significant inequality that has also progressed in the last 2 decades. 32% of India’s national income was taken by its top 10% earners in 1980, a number that has grown to 55% in recent years. Similarly, the bottom 50% of earners have seen their income share slip from 23% to 15%, the poorest of them having performed worst. He adds that though India’s poorest have benefitted from the country’s economic growth, the rich have benefitted significantly more. He points out that countries who start with a  greater inequality find it much harder to bridge the gap later.

Crabtree goes ahead to assert that even if there are some issues, the kind of growth India has shown is something African nations can only dream of. He further states that with the current progress, the perception of India worldwide needs to change because most of India is now at par with middle-income nations of South-east Asia than countries of Africa.

He states that though there are patches in India’s cities and townships that still show signs of destitution, mostly there are prosperous urban centres. Overall, he states, the old image of poverty-stricken India is fading away. He cites the example of Gorakhpur in Uttar Pradesh, stating that though the city provides employment and people cannot be called poor as per strict earning terms, due to  bad road conditions, poor healthcare, lack of good water and electricity supplies, criminality and lack of good educational facilities, the area still looks grim.

He emphasizes that like many other middle-income countries, India’s focus now should be not on the alleviation of extreme poverty because that has been mostly achieved and the momentum has been set for the total elimination of poverty soon. Instead, he suggests, India should now focus on better living standards, a better deliverance of government services and social security.

Crabtree concludes by stating that is how most nations in South-East Asia achieved their current status, by timing poverty reduction with simultaneous measures of inclusive growth, better healthcare and enabling competent state machineries for better education, living standards and healthcare.

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