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World Bank's full marks to UPA? Poverty rates "sharply reduced" in 2005-12, despite severe drought in 2009-10
A new World Bank study, released ahead of Prime Minister Narendra Modi completing two years in office, has said that the India’s national poverty rates fell much more sharply between 2005 and 2012, when the UPA government ruled the country, compared the decade between 1994 and 2005.
The study, carried out by Ambar Narayan and Rinku Murgai, and circulated as a policy research paper, says that poverty rates “decreased from 45 to 37 percent of the population between 1994 and 2005”, and “fell a further 15 percentage points in the next seven years, with similar patterns seen in both rural and urban areas”.
“This was a three‐fold increase in pace, as the country reduced poverty by 2.2 percentage points per year during 2005‐12, relative to the 0.7 percentage point per year decline between 1994 and 2005”, the World Bank study, titled “Looking Back on Two Decades of Poverty and Well-Being in India”, says.
Even during the period between 2005 and 2012, the study says, there were “two distinct phases: a moderate rate of poverty reduction till 2010 (which was still more than twice the rate of change seen between 1994 and 2005), followed by sharp and unprecedented reduction between 2010 and 2012.”
The study underlines, “Some of this volatility needs to be seen in the context of 2009‐10 being a year of particularly severe droughts, which is likely to have dampened the gains between 2005 and 2010 and conversely, accentuated the apparent progress from 2010 to 2012 as the economy rebounded to its ‘trend’ performance.”
In absolute numbers, the study, while accounting for the rise in population, says that the number of poor people remained “stubbornly high” at over 400 million in the eleven years between 1994 and 2005. However, in the next seven years, 137 million people (roughly 20 million per year) escaped poverty”, with 270 million people living in poverty in 2012.
“Poverty reduction in India was fueled by rising consumption levels, while consumption inequality remained more or less stable since 2005”, the study says, adding, “Consumption inequality measured by the Gini coefficient, after rising appreciably between 1994 and 2005, has remained almost unchanged in both rural and urban areas since then.”
“Consumption growth of the bottom 40% averaged an anemic 0.8 percent per year between 1994 and 2005, and increased four‐fold to 3.3 percent per year between 2005 and 2012, averaging more than 5 percent annually during the last two years of this period”, the study says.
“With upward mobility, the middle class has expanded sharply and is the fastest growing group between 2005 and 2012”, the study says, adding, “The middle class increased from 23 percent to 34 percent of the population.”
Coming to “non‐monetary dimensions of welfare”, the study says, “Between 2005 and 2012, significant improvements occurred in infant and child (under age 5) mortality rates, literacy rate among working adults, and the share of children under age 5 who are not underweight.”
“The decline in illiteracy among adults – from 38 percent in 2005 to 30 percent in 2012 – is matched by a 9 percent increase in the share of adults who have completed secondary education or more during this period”, the study says.
It adds, “This indicates a positive trend of skilling of the Indian labour force as secondary school enrollments and completion have increased over the years. This trend could also have an impact in terms of reducing vulnerability.”
However, it regrets, “Progress in access to piped water, sanitation and reducing stunting among children under age 5 has been much slower.”
“Poverty reduction in India was fueled by rising consumption levels, while consumption inequality remained more or less stable since 2005”, the study says, adding, “Consumption inequality measured by the Gini coefficient, after rising appreciably between 1994 and 2005, has remained almost unchanged in both rural and urban areas since then.”
“Consumption growth of the bottom 40% averaged an anemic 0.8 percent per year between 1994 and 2005, and increased four‐fold to 3.3 percent per year between 2005 and 2012, averaging more than 5 percent annually during the last two years of this period”, the study says.
“With upward mobility, the middle class has expanded sharply and is the fastest growing group between 2005 and 2012”, the study says, adding, “The middle class increased from 23 percent to 34 percent of the population.”
Coming to “non‐monetary dimensions of welfare”, the study says, “Between 2005 and 2012, significant improvements occurred in infant and child (under age 5) mortality rates, literacy rate among working adults, and the share of children under age 5 who are not underweight.”
“The decline in illiteracy among adults – from 38 percent in 2005 to 30 percent in 2012 – is matched by a 9 percent increase in the share of adults who have completed secondary education or more during this period”, the study says.
It adds, “This indicates a positive trend of skilling of the Indian labour force as secondary school enrollments and completion have increased over the years. This trend could also have an impact in terms of reducing vulnerability.”
However, it regrets, “Progress in access to piped water, sanitation and reducing stunting among children under age 5 has been much slower.”
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