Poverty in India: Data from 2020-21 shows a decline over a decade

By Dr Bibek Debroy, Sarvadanand  Barnwal & Aditya Sinha:

Poverty is a much-debated issue. It has been an issue in general. It has also received additional attention because of the exogenous shock of the pandemic. As a stylized fact, growth leads to a reduction in poverty, though the composition of growth is also important. Poverty is usually measured through headcount ratios, the percentage of population below a determined poverty line. That poverty line is typically defined as a minimum basket of goods and services required for subsistence, converted into a nominal consumption expenditure figure, using appropriate prices. That has been the approach in India since poverty began to be measured in the 1950s and was further refined in the 1970s. In other words, one uses monthly per capita consumption expenditure to define poverty line. In passing, as is common with household surveys in other countries, income data is unreliable. This does not imply that consumption poverty is the only way to measure poverty, which has many aspects. Hence, there have been attempts to construct multi-dimensional measures. But a lack of data and subjectivity hasn’t made these attempts very robust. The tried and tested headcount ratio, supplemented by something like the human development index (HDI) is as good a measure as any.

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