Resource centre on India's rural distress
 
 

Poverty and inequality

KEY TRENDS
 
• According to the report entitled Global Multidimensional Poverty Index 2019: Illuminating Inequalities, the total number of poor people in India, who face multiple deprivations in education, health and living standards, has fallen by 271 million in the last one decade viz. from 640.6 to 369.5 million between 2005-06 and 2015-16. However, the population in multidimensional poverty has increased from 369.5 million in 2015-16 to 373.7 million in 2017 viz. by 4.2 million A1
 
• According to New World Wealth Report, in India, the cumulated wealth of all High Net Worth Individuals (HNWI) increased from US$ 310 billion to US$ 588 billion and their numbers increased from 84k in 2008 to 153.4k in 2012. HNWI’s are individuals owning net assets of more than $1million (=Rs 60,000,00) value. Correspondingly, in the same time period, as per Reserve Bank of India report, the decrease in the population of BPL (Below Poverty Line; Monthly consumption below Rs.1000) was from 407k to 269k. The rate of increase in HNWI’s was 82 percent compared to reduction rate of BPL population by 24 percent #?
 
• India's multidimensional headcount ratio (H) viz. the proportion or incidence of people (within a given population) who experience multiple deprivations has reduced from 54.7 percent to 27.5 percent during the last 10 years viz. between 2005-06 and 2015-16 ## 
 
• Suggesting that India, which is home to the largest number of poor during 2012, may have been overestimating the number of its poor, the World Bank report has explained how a shift in the way consumption expenditure is recorded changes the country’s poverty rate from 21.2 percent to 12.4 percent for 2011-12 #$
 
• Based on the 14 different exclusion parameters adopted during SECC survey, it has been found that the total number of excluded households in the rural areas is 7.05 crore (39.4 percent)**

• Based on the 5 different automatic inclusion parameters, it has been found that 16.5 lakh households in rural areas are extremely poor, which is merely 0.92 percent of total rural households**

• It has been found that in the rural areas there are nearly 8.69 crore households i.e.  48.5 percent of total rural households, which are deprived in any one of the 7 deprivation criteria adopted by the SECC**
 
• In rural India, the average MPCE was Rs.1122 for ST, Rs. 1252 for SC and Rs. 1439 for OBC. In urban India it was Rs. 2193 for ST, Rs. 2028 for SC, and Rs. 2275 for OBC. The average MPCE of ‘Others’ (i.e. non-SC, non-ST and non-OBC) at national level (Rs. 1719 in rural and Rs. 3242 in urban India) was more than the all-groups average (Rs. 1430 in rural and Rs. 2630 in urban India) in both sectors @$
 
• In India, at the household level, the Gini coefficient is 0.668 for asset holdings and 0.680 for net worth. As in other countries, the wealth distribution is more concentrated than the distribution of income and especially more concentrated than that of expenditures *$ 
 
• The concentration of billionaire wealth appears to be unusually large in India. According to Forbes magazine (2014), total billionaire wealth amounts to 12 percent of gross domestic product (GDP) in 2012. As such, India is an outlier in the ratio of billionaire wealth to GDP among economies at a similar development level *$
 
• Based on the analysis presented in the Report by Rangarajan Committee, monthly per capita consumption expenditure of Rs. 972 in rural areas and Rs. 1407 in urban areas is treated as the poverty lines at the all India level. This implies a monthly consumption expenditure of Rs. 4860 in rural areas or Rs. 7035 in urban areas for a family of five at 2011-12 prices $
 
• Based on the methodology outlined in the Report by Rangarajan Committee, the poverty ratio at all India level for 2011-12 comes to 29.5%. Working backwards this methodology gives the estimate for 2009-2010 at 38.2%. This is in contrast to 21.9% as estimated by Tendulkar methodology for 2011-12 and 29.8% for 2009-10 $
 
• India is home to 343.5 million destitute people – 28.5% of its population is destitute*
 
• The Empowerment Line prepared by McKinsey Global Institute (MGI) reveals that 56 percent of India’s population lacks the means for a minimum acceptable standard of living. Based on Empowerment Line, some 680 million Indians are deprived—more than 2.5 times the population of 270 million below the official poverty line. India’s Empowerment Line stands at Rs. 1,336 per capita per month, or almost Rs. 6,700 for a family of five per month @@
 
• A total of 33,510 slums were estimated to be present in the urban areas of India. About 41% of these were notified and 59% non-notified. Maharashtra, with an estimated 7723 slums, accounted for about 23% of all slums in urban India, followed by Andhra Pradesh, accounting for 13.5%, and West Bengal, which had a share of about 12%. An estimated 8.8 million households lived in urban slums $$

• In an estimated 32% of all slums, the approach road to the slum usually remained waterlogged due to rainfall. At the all-India level, 31% of slums had no latrine facility. About 31% of all slums in India had no drainage facility $$  
 
• The percentage of persons below the Poverty Line in 2011-12 has been estimated as 25.7% in rural areas, 13.7% in urban areas and 21.9% for the country as a whole. State-wise, poverty ratio was highest in Chhattisgarh (39.93%) followed by Jharkhand (36.96%), Manipur (36.89%), Arunachal Pradesh (34.67%) and Bihar (33.74%) @

• During 2011-12, the bottom 5% of the population had an average monthly per capita expenditure of Rs. 521.44 in rural areas and Rs. 700.50 in urban areas. The top 5% of the population had an average monthly per capita expenditure of Rs. 4481.18 in rural areas and Rs. 10281.84 in urban areas *?

• India accounts for one-third (up from 22 percent in 1981) of the world poor ¥

• The Gini ratio (a measure of consumption inequality) for rural areas declined from 0.30 in 2004-05 to 0.29 in 2009-10 and for urban areas it increased from 0.37 to 0.38 during the same period

• India and China, home to huge numbers of the world’s poor, are increasingly sheltering some of the world’s richest people. In 2002, India was home to four billionaires ($US); presently the number is 55. In 2002, China claimed only one billionaire. In Forbes’ 2012 survey China recorded 115–more than Germany, France and Japan combined $

• According to Prof. Arjun Sengupta who chaired the National Commission for Enterprises in the Unorganized Sector, 77% of the population of India lives below the poverty line. Dr. NC Saxena, a retired civil servant acting as a Commissioner appointed by the Supreme Court, feels that half the country’s population of 1.15 billion is below the poverty line, which he apparently defines as a monthly per capita income of Rs 700 in rural areas and Rs 1,000 in urban areas. While a Planning Commission estimate puts the number of below poverty line (BPL) families at 62.5 million, state governments estimate that this number is closer to 107 million. Some experts feel that availing the public with more number of BPL ration cards help the state-level politicians to win elections through populist means. The World Bank’s figure for the percentage of population below the poverty line in India is 42 per cent, based on 2005 data %$

• Infant mortality rate (IMR) which was 58 per thousand in the year 2005 has fallen to 44 in the year 2011. The number of rural households provided toilet facilities annually have increased from 6.21 lakh in 2002-3 to 88 lakh in 2011-12. IMR in 2011 is the lowest in Kerala (12) and highest in Madhya Pradesh (59) against the national average of 44 ??

• In India, underweight prevalence rate among children aged 0-59 months declined from 64 percent in 1993 to 61 percent in 2006 among the poorest 20 percent while the same declined from 37 percent in 1993 to 25 percent in 2006 among the richest 20 percent. Therefore, a greater reduction in underweight prevalence occurred in the richest 20 percent of households than in the poorest 20 percent µ
 
A1 Global Multidimensional Poverty Index 2019: Illuminating Inequalities, produced by Oxford Poverty & Human Development Initiative (OPHI) and UNDP, please click here and here to access 
 
#? Wealth Inequality, Class and Caste in India 1961-2012 by Nitin Kumar Bharti, published on 20th November, 2018, World Inequality Lab, Paris School of Economics, please click here to access
 
## Global MPI 2018 report, please click link1, link2, link3, link4, link5 and link 6 to access
 
#$ Ending Extreme Poverty, Sharing Prosperity: Progress and Policies, World Bank (released in October 2015), please click here to access
 
** Socio Economic and Caste Census 2011, please click here 
 
@$ NSS 68th Round report entitled: Household Consumer Expenditure across Socio-Economic Groups 2011-12 (please click here to access)  
 
*$ Addressing Inequality in South Asia by Martín Rama, Tara Béteille, Yue Li, Pradeep K. Mitra, and John Lincoln Newman (January 2015), World Bank (please click here to access)
 
$ Report of the Expert Group to Review the Methodology for Measurement of Poverty (also called the Rangarajan Committee report on poverty), submitted to the Government of India in June 2014 (Please click here to download)
 
* Global Multidimensional Poverty Index (MPI) 2014 (please click here to download document 1, document 2 and document 3)
 
@@ From poverty to empowerment: India’s imperative for jobs, growth, and effective basic services (2014), produced by McKinsey Global Institute (MGI) (please click here to download the report)
 
$$ Key Indicators of Urban Slums in India, NSS 69th round survey, July 2012 to December 2012 (click here to read more)
 
@ Press Note on Poverty Estimates, 2011-12, Planning Commission, July, 2013,
http://planningcommission.nic.in/news/pre_pov2307.pdf
 
*? 68th round of National Sample Survey 2011-12,
http://mospi.nic.in/Mospi_New/upload/press-release-68th-HCE.pdf
 
¥ "The State of the Poor: Where are the Poor and Where are the Poorest?" (2013) by Pedro Olinto and Hiroki Uematsu, World Bank
http://www.worldbank.org/content/dam/Worldbank/document/State_of_the_poor_paper_April17.pdf

+ Report of the Expert Group to Recommend the Detailed Methodology for Identification of Families Living below Poverty Line in the Urban Areas, Planning Commission 2012, Perspective Planning Division,
http://www.im4change.org/docs/655rep_hasim1701.pdf

$ Born Equal: How reducing inequality could give our children a better future (2012), Save the Children,
http://www.savethechildren.org.uk/sites/default/files/images/Born_Equal.pdf
 
%$ Poverty of thought, The Business Standard, 2 July, 2009,
http://www.business-standard.com/india/news/povertythought/362649/ 
and other sources

?? Economic  Survey 2012-13,
http://indiabudget.nic.in/es2012-13/echap-13.pdf

µ 2013 Hunger Report-Within Reach Global Development Goals (2012), published by Bread for the World Institute, http://www.hungerreport.org/data-tables/
 
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According to the report entitled [inside]Global Multidimensional Poverty Index 2019: Illuminating Inequalities (released in July, 2019)[/inside], which has been produced by Oxford Poverty & Human Development Initiative (OPHI) and United Nations Development Programme (UNDP) (please click here and here to access):

• India's multidimensional headcount ratio (H) viz. the proportion or incidence of people (within a given population) who experience multiple deprivations has reduced from 55.1 percent to 27.9 percent during the last 10 years viz. between 2005-06 and 2015-16.

• The total number of poor people in India, who face multiple deprivations in education, health and living standards, has fallen by 271 million in the last one decade viz. from 640.6 to 369.5 million between 2005-06 and 2015-16. However, the population in multidimensional poverty has increased from 369.5 million in 2015-16 to 373.7 million in 2017 viz. by 4.2 million.

• Intensity of poverty (A), which measures deprivations that multidimensionally poor people face on an average, has declined from 51.3 percent to 43.9 percent between 2005-06 and 2015-16.

• Multidimensional poverty index (MPI) of the country, which is the product of multidimensional headcount ratio (H) and intensity (or breadth) of poverty (A), has reduced from 0.283 to 0.123 between 2005-06 and 2015-16.

• Proportion of the population in severe multidimensional poverty viz. those with a deprivation score of 50 percent or more is 8.8 percent. The proportion of the population at risk of suffering multiple deprivations viz. those with a deprivation score of 20–33 percent is 19.3 percent.

• Latest available data shows that the proportion of population living below the national poverty line is 21.9 percent and the proportion of population living below $ 1.90 a day in terms of purchasing power parity (PPP) is 21.2 percent.

• The percentage of population that is multidimensionally poor and deprived in nutrition, cooking fuel, sanitation and housing are 21.2 percent, 26.2 percent, 24.6 percent and 23.6 percent, respectively.

• In Jharkhand, multidimensional poverty (H) reduced from 74.9 percent to 46.5 percent between 2005-06 and 2015-16. India strongly improved assets, cooking fuel, sanitation and nutrition.

• India demonstrates the clearest pro-poor pattern at the subnational level: the poorest regions reduced multidimensional poverty the fastest in absolute terms. In India poverty reduction in rural areas outpaced that in urban areas demonstrating pro-poor development.

• In India there were 271 million fewer people in multidimensional poverty in 2016 than in 2006, while in Bangladesh the number dropped by 19 million between 2004 and 2014.

• Of 10 selected countries for which changes over time were analysed, India and Cambodia  reduced their MPI values the fastest and they did not leave the poorest groups behind.

• Child poverty fell markedly faster than adult poverty in Bangladesh, Cambodia, Haiti, India and Peru.

• In terms of gender disparities, 9 percent of boys in South Asia are out of school and live in a multidimensionally poor household, compared with 10.7 percent of girls. In India, there is a higher percentage of girls who are multidimensionally poor and out of school than boys. However, the figures for India are lower than the South Asian average for both boys and girls.
 
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According to the paper entitled [inside]Wealth Inequality, Class and Caste in India 1961-2012[/inside] by Nitin Kumar Bharti, published on 20th November, 2018, World Inequality Lab, Paris School of Economics (please click here to access):

• The present paper produces long-term wealth inequality series of India using survey data and correcting the top wealth distribution using the Forbes millionaires data. It complements the income inequality series produced by Banerjee (2005) and Chancel and Piketty (2017) on India.

• The income share of top 10 percent population shows an increasing trend since 1980 to reach 55 percent in 2013. The top 10 percent population's wealth share increased from 45 percent in 1981 to 58 percent (pre-correction) and 62 percent (post-correction) in 2012.

• The average annual income of an household in India is Rs. 1,13,222 (viz. Rs. 9,435 per month). The annual income of ST and SC group stands at 0.7 times and 0.8 times lower than the all-India average income. Other Backward Classes (OBC) and Muslims both have around 0.9 times household income of the overall average income. Forward castes (FC), have average household income at 1.4 times the all-India income (with a slight difference between Brahmin and Non-Brahmin). There is sequential inequality (SI) based on average income with ranking ST < SC < Muslim < OBC < OVERALL < FC(Non-Brahmin) < FC(Brahmin) < Others trend. A similar trend was observed for per-capita level of annual income. The standard deviation is highest for Others followed by FC(Non-Brahmin), FC(Brahmin), SC, Muslim, OBC and ST.

• 50 percent of the Brahmin, 31 percent of Rajputs, 44 percent of Bania and 57 percent of Kayasth fall in richest category. For other caste groups only 5 percent ST, 10 percent SC, 16 percent OBC, 17 percent Muslims fall in richest category.

• Brahmins have highest adult education followed by Others and FC (Non-Brahmins). The comparison for adult education across different community gives - ST < Muslim < SC < OVERALL < OBC < FC(Non-Brahmin) < FC(Brahmin) < Others

• When education level of adult is compared among the forward castes using NFHS-3 data, it was found that Kayasth with 12.3 years of education is highest, followed by Brahmins (11.9 years), Bania (10.3 years), Rest of FC (9.16 years) and Rajput (9.05 years).

• Within ST, Christians have 1.6 times income and assets than all-India average and their educational level is better than many other groups. Muslim ST’s economic parameters are closer to all-India average but education wise they are behind. Hindus and Other/ No religion ST’s which forms 78 percent and 12 percent of all ST's are the worst performing groups.

• The average per capita wealth (APCA) is increasing since 1961 and the increase is faster in recent years. In rural areas, till 2002 there is only a modest increase from Rs.50.8k in 1961 to around Rs.180k in 2002. This figure jumped to Rs.390k in 2012 which is nearly 117 percent growth in a decade or about 7.5 percent annual growth rate from 2002-12. Similarly, in urban areas, we see a steep increase after 2002. The APCA in urban areas has increased from 272k in 2002 to 904k in 2012, implying an increase of 232 percent, or about 12.7 percent annual growth rate.

• The Urban-Rural gap in APCA is consistently increasing since 1981. The ratio of urban APCA to rural APCA has increased to 2.32 in 2012 from 1.25 in 1981.

• ST formed 8-9 percent of total population and SC formed 18-19 percent of total population. The information on OBC is present only for 2002 and 2012 survey. The proportion of OBC increased from 40.28 percent in 2002 to 43.57 percent in 2012 i.e. almost an increase of 3 percentage points. A 2 percent decline in FC share and 1 percent decline in Muslim is observed.

• SC suffers the worst in total wealth share as it owns only around 7-8 percent of total wealth, which is almost 11 percentage points (pp) less than their population share. ST owns 5 percent to 7 percent of total wealth which is around 1-2 percentage points less than their population share. OBC group owns almost 32 percent of total wealth in 2002 which increased only marginally in 2012 resulting in overall worsening of the gap relative to population share (almost 7.8 percent to nearly 10.2 percent), due to considerable increase in their population share. On the other hand, FC group share has shown an increase from 39 percent to 41 percent in their share in total wealth. Relative to their population share this group improved the gap from +14% to +18%.

• Rural area seems more favourable for OBC group and less favourable to FC. In urban areas the sign of gap changes for ST group, i.e. they own more wealth than their population share. In 1991, 2002 and 2012, the relative gap is +1.12 pp, +2.24 percentage points and +1.72 percentage points respectively presenting urban area to be favourable to ST.

• According to New World Wealth Report, in India, the cumulated wealth of all High Net Worth Individuals (HNWI) increased from US$ 310 billion to US$ 588 billion and their numbers increased from 84k in 2008 to 153.4k in 2012. HNWI’s are individuals owning net assets of more than $1million (=Rs 60,000,00) value. Correspondingly, in the same time period, as per Reserve Bank of India report, the decrease in the population of BPL (Below Poverty Line; Monthly consumption below Rs.1000) was from 407k to 269k. The rate of increase in HNWI’s was 82 percent compared to reduction rate of BPL population by 24 percent.

• At all-India level, top 10 percent of population had 45 percent of total wealth in 1981 which increased to almost 58 percent, an increase of 15 percentage points (pp) in 30 years. There is a major jump in 2012 from 2002 almost 10 percentage points. On the other hand, looking at bottom 10 percent we see, total wealth share is less than 0.6 percent for all the years and for both sectors. Wealth inequality is lower in rural areas than in urban areas and we see an improving trend (i.e. increase in wealth share of bottom 10 percent) in both rural and urban areas.

• In rural areas, the top decile share saw a slight decrease/ stagnation in the period of 1961-1981 at almost 43 percent, which withered away in later decades when the top decile share jumped to 51.2 percent. In 60 years, the change in top decile share is of +8 percentage points.

• In urban areas, the top decile shares in total wealth stood at 55 percent in 1991 which first declined to 52.5 percent in 2002 and then gained 7 percentage points to reach to 60 percent level. In 1991-2002 the top 10 percent wealth share decreases only in urban areas while it remains constant in rural areas. Nevertheless after 2002 the 10 percent wealth share increases faster in urban areas than in rural areas.

• Middle wealth population in rural India used to own 45 percent total value of rural wealth in 1961 which has decreased to roughly 39 percent in 2012. The wealth share almost equals the population share of the middle 40 percent. In urban sector, middle 40 percent share has declined to below 35 percent in 2012 from almost 42 percent in 1981. A jump in 2002 in middle wealth population is observed which is in contrast to the decline of top 10 percent share. At all-India level, the share of middle wealth population is now closer to urban sector level at nearly 35 percent.

• The share of bottom 50 percent in rural India has decreased from 12.6 percent in 1961 to 10.5 percent in 2012 which implies a drop of 15.9 percent.

• Inequality in urban regions is more extreme. In those regions the bottom 50 percent owns only 5.9 percent of total wealth. At all-India level the share of this section stands at 8 percent. The condition of half of the population of country is dismal in the share of total wealth.

• Out of the total asset share with top decile in rural area, top 5 percent population owned 70.4 percent in 1961 and 74.3 percent in 2012. Looking at the evolution of portion of top 1 percent population in total wealth share of top 10 percent population, one could see first a decrease from 1961 to 1981 and then an increase post 1981 to reach at 33.5 percent. The period of 1961-71 and 1971-81 saw a small decline which happen to be the years when land reforms were implemented in India.

• The concentration at top is higher in urban areas than in rural areas. The portion of wealth share of top 5 percent population in the wealth share of top decile, increased from 71 percent in 1981 to 78 percent in 2012. Similarly, top 1 percent population captured 29.4 percent in 1981 to 44.5 percent in 2012 of the total wealth shares of top decile. The year of 2002 is an aberration, when wealth share of top 5 percent and top 1 percent (and also of top 10 percent share) saw a major decline in urban area. This is the time period just after the implementation of liberalization in India. The decrease in the wealth share at top 10 percent is distributed across all the lower deciles.
 
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The key findings of the report entitled [inside]Global MPI 2018 report[/inside] (please click link1, link2, link3, link4, link5 and link 6 to access) are as follows:

• India's multidimensional headcount ratio (H) viz. the proportion or incidence of people (within a given population) who experience multiple deprivations has reduced from 54.7 percent to 27.5 percent during the last 10 years viz. between 2005-06 and 2015-16.

• The total number of poor people, who face multiple deprivations in education, health and living standards, has dropped by 271 million in the last one decade viz. from 635.2 million to 364.2 million between 2005-06 and 2015-16.

• Intensity of poverty (A), which measures deprivations that multidimensionally poor people face on an average, has declined from 51.07 percent to 43.9 percent between 2005-06 and 2015-16.

• Multidimensional poverty index (MPI) of the country, which is the product of multidimensional headcount ratio (H) and intensity (or breadth) of poverty (A), has shrunk from 0.279 to 0.121 between 2005-06 and 2015-16.

• Just over 9 percent of the population are still vulnerable to poverty, meaning that they are deprived in 20 to 33 percent of weighted indicators. And, sadly, 113 million people -- 8.6 percent of India's people -- live in severe poverty, each one of these people experiencing more than 50 percent of weighted deprivations.

• Across nearly every state, poor nutrition is the largest contributor to multidimensional poverty, responsible for 28.3 percent of India's MPI. Not having a household member with at least six years of education is the second largest contributor, at 16 percent. Insufficient access to clean water and child mortality contributes least, at 2.8 percent and 3.3 percent, respectively. Relatively few poor people experience deprivations in school attendance -- a significant gain.

• The poorest district in the country is Alirajpur in Madhya Pradesh, where 76.5 percent of people are poor -- the same as Sierra Leone in Sub-Saharan Africa. Only eight countries have higher rates of MPI. In four districts more than 70 percent of people are poor; these are located in Uttar Pradesh and Madhya Pradesh. Twenty-seven districts have 60 to 70 percent of their people in poverty. At the other end of the scale, in 19 districts less than 1 percent of people are poor, and in 42 districts, poverty rates are 2 to 5 percent.

• In the 134 districts of Maharashtra, Telangana, Andhra Pradesh, Karnataka, Tamil Nadu, and Kerala, there are just two districts with poverty rates above 40 percent. These are Nandurbar in northern Maharashtra bordering Gujarat (60 percent) and Yadgir in northeastern Karnataka, where almost every second person is multidimensionally poor. In Tamil Nadu and Kerala, most district-level headcount ratios hover around 10 percent or less -- rates that are comparable to those of Eastern European and South American regions. Interestingly, districts in the far northern states such as Punjab, Haryana, and Himachal Pradesh show a similar pattern.

• Within India, 40.4 million people live in districts where more than 60 percent of people are poor – 20.8 million live in the poorest districts in Bihar, 10.6 million in the poorest districts in Uttar Pradesh, and the remainder in the poorest districts in Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, and Odisha.

International comparison

• In comparison to India (MPI=0.121), the MPIs of Bangladesh (MPI=0.194), Bhutan (MPI=0.175), Afghanistan (MPI=0.273), Myanmar (MPI=0.176), Nepal (MPI=0.154) and Pakistan (MPI=0.228) are higher. China (MPI=0.017) and Maldives (MPI=0.007), on the other hand, have lower MPIs than India.

• In terms of multidimensional headcount ratio (H), the country (H=27.51 percent) lags behind Bangladesh (H=41.07 percent), Bhutan (H=37.34 percent), Afghanistan (H=56.10 percent), Myanmar (H=38.35 percent), Nepal (H=35.25 percent) and Pakistan (H=43.88 percent), but is ahead of China (H=4.11 percent) and Maldives (1.88 percent).

• In terms of intensity of poverty (A), India (A=43.90 percent) lags behind Bangladesh (A=47.33 percent), Bhutan (A=46.83 percent), Afghanistan (A=48.72 percent), Myanmar (A= 45.92 percent), and Pakistan (A=52.04 percent), but is ahead of China (H=41.38 percent), Nepal (A=43.58 percent) and Maldives (A=36.61 percent).

• If we look at the societal distribution of deprivations in the country among the poor, vulnerable, and non-poor, we see that whereas 91 percent of people experienced any deprivation in 2005-6, it is 82.4 percent in 2015-16 so deprivation-free persons have doubled from 9 percent to 18 percent of the population, and those with very low deprivations rose also. But the percentage of vulnerable people increased by only 2 percent, and across all the poor people, the poorer they were, the more their poverty decreased. So, for example, while 7.3 percent of the population were deprived in 70 percent or more of the weighted indicators in 2005-06, it is 1.2 percent in 2015-16. This slightly technical mapping of all experienced deprivations verifies the societal change that is evident in the faster reduction for the poorest groups, says the report.

• Although the latest data shows that the rate of decline in multidimensional poverty has been the greatest for the most deprived, huge gaps in the level of deprivations, based on religion, caste and regions, still exists.

Rural-urban gap


• In rural India, multidimensional headcount ratio (H) has decreased from 68.0 percent to 36.5 percent during the last 10 years viz. between 2005-06 and 2015-16. In urban India, the same has fallen from 24.6 percent to 9.0 percent between 2005-06 and 2015-16.

• The total number of people affected by non-income poverty in rural areas has lessened by nearly 40.6 percent viz. from 547.5 million in 2005-06 to 325.1 million in 2015-16. Similarly, in urban areas, the total number of people affected by multidimensional poverty has fallen by more than 50 percent viz. from 87.7 million to 39.1 million in the same time span.

• The intensity of poverty (A) in rural India has declined from 51.8 percent to 44.1 percent between 2005-06 and 2015-16. The same in urban areas has fallen from 46.6 percent to 42.6 percent between 2005-06 and 2015-16.

• The country's MPI in rural areas has dropped from 0.352 to 0.161 between 2005-06 and 2015-16. The same in urban areas has lessened from 0.115 to 0.039 during that 10-year span.

Inter-state differences


• The top five states/ UTs in terms of proportion of people affected by non-income poverty in 2015-16 are Bihar (52.2 percent), Jharkhand (45.8 percent), Madhya Pradesh (40.6 percent), Uttar Pradesh (40.4 percent) and Chhattisgarh (36.3 percent).

• The bottom five states/ UTs in terms of proportion of people affected by non-income poverty are Kerala (1.1 percent), Delhi (3.8 percent), Sikkim (4.9 percent), Goa (5.6 percent) and Punjab (6.0 percent). 

• The highest fall in multidimensional headcount ratio (H) between 2005-06 and 2015-16 has been noted for Arunachal Pradesh (35.7 percentage points), followed by Tripura (34.3 p.p.), Andhra Pradesh (34.1 p.p.), Chhattisgarh (33.7 p.p.) and Nagaland (33.6 p.p.).

• In 2015-16, the top five states/ UTs in terms of number of people affected by non-income poverty are Uttar Pradesh (82.9 million), Bihar (60.4 million), Madhya Pradesh (34.8 million), West Bengal (25.9 million) and Rajasthan (22.9 million). The bottom five states/ UTs in terms of number of people affected by non-income poverty are Sikkim (27,000), Goa (88,000), Mizoram (1.08 lakh), Arunachal Pradesh (2.73 lakh) and Nagaland (3.70 lakh).

• In 2015-16, the four poorest states -- Bihar, Jharkhand, Uttar Pradesh, and Madhya Pradesh -- were still home to 196 million MPI poor people -- over half of all the MPI poor people in India. 

• In absolute terms, the highest drop in the number of people affected by multidimensional poverty between 2005-06 and 2015-16 has been noted for Uttar Pradesh (50.3 million), followed by West Bengal (26.8 million), Andhra Pradesh (26.6 million), Maharashtra (21.6 million) and Karnataka (20.1 million). 

• The top five states/ UTs in terms of intensity of poverty are Bihar (47.2 percent), Rajasthan & Mizoram (both 45.2 percent), Uttar Pradesh & Jharkhand (both 44.7 percent), Assam (44.6 percent) and Meghalaya (44.5 percent).

• The bottom five states/ UTs in terms of intensity of poverty are Goa (37.2 percent), Kerala & Himachal Pradesh (both 37.4 percent), Tamil Nadu (37.5 percent), Sikkim (38.1 percent) and Karnataka (39.8 percent).

• The top five states/ UTs in terms of MPI are Bihar (MPI=0.246), Jharkhand (MPI=0.205), Uttar Pradesh & Madhya Pradesh (both MPI= 0.180), Assam (MPI=0.160) and Odisha (MPI=0.154).

• The bottom five states/ UTs in terms of MPI are Kerala (MPI=0.004), Delhi (MPI=0.016), Sikkim (MPI=0.019), Goa (MPI=0.021) and Punjab (MPI=0.025).

• Among states, Jharkhand had the greatest improvement in terms of MPI, with Arunachal Pradesh, Bihar, Chhattisgarh, and Nagaland only slightly behind.

Multidimensional poverty among religious groups


• Every third Muslim is multidimensionally poor, compared to every sixth Christian.

• Among Muslims (H=60.3 percent in 2006; H=31.1 percent in 2016), multidimensional headcount ratio is the highest, followed by the Hindus (H=54.9 percent in 2006; H=27.7 percent in 2016) and the Christians (H=38.8 percent in 2006; H=16.1 percent in 2016).

• The intensity of poverty is higher among Muslims (A=54.9 percent in 2006; A=46.4 percent in 2016) as compared to rest of the religions. MPI is higher among Muslims (MPI=0.331 in 2006; MPI=0.144 in 2016) as compared to rest of the religions. 

• In absolute terms, MPI, A and H reduced faster for Muslims as compared to other religious groups.

Multidimensional poverty among castes


• Traditionally disadvantaged subgroups such as rural dwellers, lower castes and tribes, Muslims, and young children are still the poorest in 2015-16. For example, half of the people belonging to any of the Scheduled Tribes (STs) communities are MPI poor, whereas only 15 percent of the higher castes are.

• Multidimensional headcount ratio (H) among the Scheduled Castes (SCs) has reduced from 65.0 percent in 2006 to 32.9 percent in 2016 -- a drop by 32.1 percentage points.

• Multidimensional headcount ratio (H) among the Scheduled Tribes (STs) has fallen from 79.8 percent in 2006 to 50.0 percent in 2016 -- a fall by 29.8 percentage points.

• The same among the Other Backward Classes (OBCs) has decreased from 57.9 percentage in 2006 to 26.9 percent in 2016 -- a decrease by 31.0 percentage points.

• MPI has decreased the most in absolute terms for STs (-0.218), followed by SCs (-0.193) and OBCs (-0.174).

Multidimensional poverty among age-groups


• Two in five children under 10 years of age are poor (41 percent), but less than one quarter of people aged 18 to 60 (24 percent) are.

• Multidimensional headcount ratio (H) is the highest among the age-group 0-9 years (viz. H=40.9 percent) in 2016. Similarly, MPI is the highest among the age-group 0-9 years (MPI=0.371 in 2006; MPI=0.189 in 2016).

• If one considers the 364 million people who are MPI poor in 2015-16, 156 million (34.6 percent) are children. In fact, of all the poor people in India, just over one in four -- 27.1 percent -- has not yet celebrated their tenth birthday.

• Multidimensional poverty among children under 10 has fallen the fastest. In 2005/6 there were 292 million poor children in India, so the latest figures represent a 47 percent decrease or 136 million fewer children growing up in multidimensional poverty.

• The highest absolute decline in censored headcounts between 2005-06 and 2015-16 has been observed for assets (-27.9 percentage points), followed by cooking fuel (-26.6 p.p.), sanitation (-25.8 p.p.), nutrition (-22.9 p.p.), housing (-21.3 p.p.) and electricity (-20.3 p.p.).
 
 
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As per the World Bank report entitled [inside]Ending Extreme Poverty, Sharing Prosperity: Progress and Policies (released in October 2015)[/inside], authored by Marcio Cruz, James Foster, Bryce Quillin, and Phillip Schellekkens, please click here to access: 

Indian scenario

•  India was home to the largest number of poor in 2012, but its poverty rate is one of the lowest among those countries with the largest number of poor. A new methodology applied to household surveys in India shows that its poverty rate could be even lower.

• Suggesting that India, which is home to the largest number of poor during 2012, may have been overestimating the number of its poor, the World Bank report has detailed how a shift in the way consumption expenditure is recorded alters the country’s poverty rate from 21.2 per cent to 12.4 per cent for 2011-12.

• In its report, the World Bank, highlighting ‘Why poverty in India could be even lower’, says the poverty rate of India can change if data recording is based on the modified mixed reference period (MMRP) instead of the uniform reference period (URP).

• Under the URP, used in the National Sample Surveys (NSS) since the 1950s, data is collected on the “30-day recall for consumption of both food and non-food items to measure expenditures”. But under the MMRP, which was done in NSS (alongside URP) in 2009-10, the 30-day recall was modified to a 7-day recall for some food items and to a 1-year recall for low-frequency non-food consumption items.

• The report states  that the MMRP was recommended as a more accurate reflection of consumption expenditures. As a result of the shorter recall period for food items, MMRP-based consumption expenditures in both rural and urban areas are 10-12 per cent larger than URP-based aggregates. These higher expenditures, combined with a high population density around the poverty line, translates to a significantly lower poverty rate of 12.4 percent for 2011/12.

• Uniform Reference Period monthly per capita consumption expenditure (MPCE) is the measure of MPCE obtained by the NSS consumer expenditure survey (CES) when household consumer expenditure on each item is recorded for a reference period of “last 30 days” (preceding the date of survey).

• Modified Mixed Reference Period MPCE is the measure of MPCE obtained by the CES when household consumer expenditure on edible oil, egg, fish and meat, vegetables, fruits, spices, beverages, refreshments, processed food, pan, tobacco and intoxicants is recorded for a reference period of “last 7 days”, and  for all other items, the reference periods used are the same as in case  of Mixed Reference Period MPCE (MPCEMRP).

• In its regional forecast for 2015, the World Bank report says that poverty in East Asia and the Pacific would fall to 4.1 percent of its population, down from 7.2 percent in 2012; Latin America and the Caribbean would fall to 5.6 percent from 6.2 percent in 2012. In South Asia, the poverty would fall to 13.5 percent in 2015 compared to 18.8 percent in 2012; Sub-Saharan Africa poverty would decline to 35.2 percent in 2015 compared to 42.6 percent in 2012.

Global scenario

• The World Bank report has set a new global poverty line at $1.90 using 2011 prices. Based on the new global poverty line, there were just 902 million people  globally who lived under the poverty line of $1.90 in 2012 (based on the latest available data).

• Using the new global poverty line (as well as new country-level data on living standards), the World Bank projects that global poverty will have fallen from 902 million people or 12.8 percent of the global population in 2012 to 702 million people, or 9.6 percent of the global population, this year.

• As differences in the cost of living across the world evolve, the global poverty line has to be periodically updated to reflect these changes. Since 2008, the last update, the World Bank used $1.25 as the global line.

• The new global poverty line uses updated price data to paint a more accurate picture of the costs of basic food, clothing, and shelter needs around the world. In other words, the real value of $1.90 in today’s prices is the same as $1.25 was in 2005.

• The proportion of global population living on less than $ 1.90 a day in 2012  was about a third of what it was in 1990. As per the World Bank report, this confirms that the first Millennium Development Goal (MDG) target—cutting the extreme poverty  rate to half  of  its  1990  level—was  met well  before  its  2015  target  date. From a broader historical perspective, the global poverty rate has fallen by approximately 1 percentage point a year since 1990, with rapid poverty reduction in China and India playing a central role in this outcome. 

More sources:

World Bank estimates show fall in India’s poverty rate -Vidya Venkat, The Hindu, 6 October, 2015, please click here to access
  
Poverty rate in India lowest among nations with poor population -Lalit K Jha, Livemint.com/ PTI, 5 October, 2015, please click here to access

Count of poor people in India may be lower, says World Bank -Udit Misra, The Indian Express, 6 October, 2015, please click here to access

FAQs: Global Poverty Line Update, World Bank, please click here to access
 
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The [inside]Socio Economic and Caste Census 2011 (released in July 2015)[/inside] provides useful data on households regarding various aspects of their socio-economic status – housing, land-holding/landlessness, educational status, status of women, the differently able, occupation, possession of assets, SC/ST households, incomes, etc.

The SECC 2011 has provision for automatic exclusion on the basis of 14 parameters, automatic inclusion on the basis of 5 parameters and grading of deprivation on the basis of seven criteria. The data addresses the multi dimensionality of poverty and provides a unique opportunity for a convergent, evidence based planning with a Gram Panchayat as a unit.

Based on fulfilling any of the following 14 parameters of exclusion, a household will be enumerated as excluded i.e.

i. Motorized 2/3/4 wheeler/fishing boat;
ii. Mechanized 3 – 4 wheeler agricultural equipment;
iii. Kisan credit card with credit limit of over Rs. 50,000/-;
iv. Household member government employee;
v. Households with non-agricultural enterprises registered with government;
vi. Any member of household earning more than Rs. 10,000 per month;
vii. Paying income tax;
viii. Paying professional tax;
ix. 3 or more rooms with pucca walls and roof;
x. owns a refrigerator;
xi. Owns landline phone;
xii. Owns more than 2.5 acres of irrigated land with 1 irrigation equipment;
xiii. 5 acres or more of irrigated land for two or more crop season;
xiv. Owning at least 7.5 acres of land or more with at least one irrigation equipment.

Based on fulfilling any of the following 5 parameters of inclusion, a household will be enumerated as automatically included i.e.

i. Households without shelter;
ii. Destitute, living on alms;
iii. Manual scavenger families;
iv. Primitive tribal groups;
v. Legally released bonded labour.

The 7 deprivation criteria are:

i. Households with only one room, kuccha walls and kuccha roof;
ii. No adult member in household between age 18 and 59;
iii. Female headed household with no adult male member between 16 and 59;
iv. Households with differently able member with no other able bodied adult member;
v. SC/ST Households;
vi. Households with no literate adult above age 25 years;
vii. Landless households deriving a major part of their income from manual labour.

The SECC 2011 has three census components, which were conducted by three separate authorities but under the overall coordination of Department of Rural Development (under the Ministry of Rural Development) in the Government of India. The Census in Rural Area has been conducted by the Department of Rural Development (DoRD). The Census in Urban areas is under the administrative jurisdiction of the Ministry of Housing and Urban Poverty Alleviation (MoHUPA). The Caste Census is under the administrative control of the Ministry of Home Affairs: Registrar General of India (RGI) and Census Commissioner of India.

At each stage of the SECC, there was an opportunity for transparency and grievance redressal. A total of 1.24 crore claims and objections were received of which 99.7 percent have already been resolved. Gram Panchayats and Gram Sabhas were involved in this process, besides School Teachers and Data Entry Operators as enumerators.

As per the Socio Economic Caste Census (www.secc.gov.in) data, which was released in July 2015:

Rural scenario

• Nearly 73.4 percent of households in India live in rural areas i.e. there are 17.91 crore rural households out of total 24.39 crore households.

• Based on the 14 different exclusion parameters adopted during SECC survey, it has been found that the total number of excluded households in the rural areas is 7.05 crore (39.4 percent).

• Based on the 5 different automatic inclusion parameters, it has been found that 16.5 lakh households in rural areas are extremely poor, which is merely 0.92 percent of total rural households.

• It has been found that in the rural areas there are nearly 8.69 crore households i.e.  48.5 percent of total rural households, which are deprived in any one of the 7 deprivation criteria adopted by the SECC.

Deprivation in rural India

• The SECC 2011 has found that 2.37 crore households (13.2 percent) in rural areas live in houses with only one room, kuccha walls and kuccha roof.

• There are 65.15 lakh such households (3.64 percent) in rural areas, which have no adult member in household between age 18 and 59 years.

• There are 68.96 lakh female headed households (3.85 percent) in rural areas with no adult male member between 16 and 59.

• There are 7.16 lakh rural households with differently able member (0.40 percent) without any other able bodied adult member.

• There are 3.86 crore Scheduled Caste (SC) and Scheduled Tribe (ST) households (21.5 percent) in rural areas. 

• There are 4.21 crore (23.5 percent) rural households with no literate adult above the age of 25 years.

• There are 5.37 crore (almost 30 percent) rural landless households deriving a major part of their income from manual labour.

Sources of rural livelihood

• There are 5.39 crore rural households (nearly 30 percent) that rely on cultivation.

• There are 9.16 crore rural households (nearly 51.1 percent) that rely on manual casual labour.

• The percentage of landless rural households deriving major part of their income from manual casual labour is 38.3 percent at the national level. The same varies from 6.03 percent in Nagaland to 55.8 percent in Tamil Nadu. 

• There are 44.84 lakh rural households (nearly 2.5 percent) that depend on part-time or full time domestic service.

• There are 4.08 lakh rural households (a miniscule 0.23 percent) that rely on rag picking etc.

• There are 28.87 lakh non-agricultural own account enterprises (1.61 percent) in the rural areas.

• The percentage of households with non-agricultural enterprises registered with government is 2.73 percent at the national level. The same varies from 0.57 percent in Chhattisgarh to 19.54 percent in NCT of Delhi.

• There are 6.68 lakh rural households (a miniscule 0.37 percent) that rely on begging/ charity/ alms. The percentage of households with destitutes/ living on alms varied from 0.05 percent in Manipur and Tamil Nadu to 1.26 percent in West Bengal.

• There are 2.5 crore rural households (almost 14 percent) that rely on government service, private service, PSU employment, etc.

More information on the excluded

• The percentage of households owning irrigated land is 25.63 percent. The same varies from 2.13 percent in Chandigarh to 50.31 percent in Uttar Pradesh.

• The percentage of households owning mechanized three/four wheeler agricultural equipments is 4.12 percent. The same varies from 0.36 percent in Kerala to 16.16 percent in Punjab.

• The percentage of rural households having kisan credit card with the credit limit of Rs.50,000 and above is 3.62 percent. The same varies from 0.24 percent in Lakshadweep to 9.63 percent in Haryana.

• The percentage of rural household which don't own land but have kissan credit card is 0.39 percent. The same varies from 0.10 percent in Dadra and Nagar Haveli to 4.65 percent in Daman and Diu.

• The percentage of rural households with irrigation equipment is 9.87 percent at the national level. The same varies from 0.72 percent in Arunachal Pradesh to 23.54 percent in Haryana.

• The percentage of rural households which have no land but have irrigation equipment is 0.89 percent. The same varies from 0.15 percent in Jammu and Kashmir to 8.52 percent in Daman and Diu.

• The percentage of rural households paying income tax / professional tax is 4.58 percent at the national level. The same varies from 1.81 percent in Chhattisgarh to 23.21% in Andaman and Nicobar Islands.

• The percentage of rural households without any phone is 27.93 percent at the national level. The same varies from 3.94 percent in NCT of Delhi to 70.88 percent in Chhattisgarh.

• The percentage of rural households with salaried job in government is 5 percent. The same varies from 1.93 percent in Andhra Pradesh to 41.1 percent in Lakshadweep.

• The percentage of rural households among which the monthly income of highest earning household member has been greater than Rs. 10000 is 8.29 percent. The same varies from 3.2 percent in Chhattisgarh to 43.19 percent in Lakshadweep.

• The percentage share of rural households owning a refrigerator is 11.04 percent. The same varies from 2.61 percent in Bihar to 69.37 percent in Goa.

• The percentage share of rural households having motorized two/ three/ four wheelers and fishing boats is 20.69 percent. The same varies from 8.09 percent in Tripura to 65.85 percent in Goa.
 
For further information, please click here
 
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The key findings of the NSS 68th Round report entitled: [inside]Household Consumer Expenditure across Socio-Economic Groups 2011-12 (published in February 2015) [/inside] (please click here to access) are:

Average Monthly per Capita Consumption Expenditure (MPCE) across Socio-Economic Groups

• In rural India, the average MPCE was Rs.1122 for ST, Rs. 1252 for SC and Rs. 1439 for OBC. In urban India it was Rs. 2193 for ST, Rs. 2028 for SC, and Rs. 2275 for OBC.

• The average MPCE of ‘Others’ (i.e. non-SC, non-ST and non-OBC) at national level (Rs. 1719 in rural and Rs. 3242 in urban India) was more than the all-groups average (Rs. 1430 in rural and Rs. 2630 in urban India) in both sectors.

• Among the rural household types, average MPCE was Rs. 1509 for ‘self-employed in non-agriculture’, Rs. 1436 for ‘self-employed in agriculture’, Rs. 2002 for ‘regular wage/ salary earning’, Rs. 1159 for ‘casual labour in agriculture’, Rs. 1238 for ‘casual labour in non-agriculture’ and Rs. 1893 for ‘others’.

• In urban India, average MPCE was Rs. 2415 for the ‘self-employed’, Rs.3062 for the ‘regular wage or salary earning’, Rs.1514 for ‘casual labour’ and Rs. 3734 for ‘others’.

• Among rural households classified by size of land possessed, the topmost class (>4 hectares) had an average MPCE of Rs. 1953 and the lowest class (<0.01 hectares) had an average MPCE of Rs. 1391.

• A positive association between size of land possessed and average MPCE in the rural sector was by and large, observed in most major States, especially if the lowest class was left out, in the sense that average MPCE increased with increase in land size.

Distribution of MPCE

• If MPCE classes are formed so that percentage of population (taking all social group together) is the same in all the classes, the percentage of ST and SC population is seen to fall as one moves from lower to higher MPCE classes, the fall being more steep in case of ST in the rural sector. By contrast, the percentage of the ‘Others’ population increases as one moves from lower to higher MPCE classes. For OBCs, there is a fall in the urban sector but not in the rural.

• In the rural sector the percentage of ‘regular wage/salary earning’ and ‘others’ households rose noticeably relative to the entire population as MPCE increased. The percentage of ‘self-employed in non-agriculture’ households rose gently with increase in MPCE, while the percentage of ‘casual labour in agriculture’ and ‘casual labour in non-agriculture’ households declined markedly.

• In the urban sector, a steep fall was observed in the percentage of population of ‘casual labour’ households in an MPCE class, relative to the entire population, throughout the MPCE range, from a level of 249 per 1000 in bottom MPCE class to 10 per 1000 in the top MPCE class. For the ‘regular wage/salaried’, a smooth upward trend was seen.

• In the rural sector, for the top two land possessed size classes (between 2 to 4 hectares and more than 4 hectares), the proportion of persons in an MPCE class increased with MPCE relative to the entire population, and the rise was steeper for the 4.01+ class.

Pattern of Consumption: Variation across Socio-Economic Groups

• Among rural households cereals accounted for 13% of consumer expenditure for the ST households, 11% for the SC and OBC households, and 10% for the ‘Others’ household. In urban area the ST and SC households spent 8% of their consumer expenditure on cereals, the OBC households spent 7%, the ‘Others’ spent 6%. The share of non-food varied over social groups from 44% for the ST group to 49% for ‘Others’ in the rural sector and from 53% for SC to 60% for Others in the urban sector.

• Among rural households cereals accounted for 12% of consumer expenditure for ‘casual labour in agriculture’ households, around 8% for ‘others’ and ‘regular wage/salary earning’ households; approximately 11% for the other three household types. Among urban households ‘casual labour’ households spent 10% of their consumer expenditure on cereals, the self-employed spent 7%, the ‘regular wage/salary earning’ spent 6%, and ‘others’ 5%.

• Among the land possessed size classes in rural areas, the lowest four size classes (spanning the 0-2 hectares range) showed very similar consumption patterns. Beyond this range, consumption patterns showed the characteristics of the relatively affluent, with the share of food falling.

Trends in MPCE differences among social groups

• Estimates from the quinquennial consumer expenditure surveys conducted in 2004-05, 2009-10, and 2011-12 indicate that the ranking of the social groups by MPCE has remained the same over the 7-year period 2004-05 to 2011-12 in both rural and urban sectors. In both sectors, ‘Others’ had the highest MPCE, followed by ‘OBC’, over this period. The lowest MPCE was that of the ST group in the rural sector and that of the SC group in the urban.

• Average MPCE of the OBC group, in both the rural and urban areas, showed a minor improvement in respect of percentage difference from average MPCE of all-social-groups between 2004-05 and 2011-12.

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As per the new World Bank report entitled: [inside]Addressing Inequality in South Asia (published in January 2015)[/inside], if standard monetary indicators are to be taken at face value, South Asia has modest levels of inequality. Gini coefficients for consumption per capita range between 0.28 and 0.40 depending on the country, much lower than in China, Mexico, or South Africa. The share of the poorest 40 percent of households in total consumption also suggests that inequality in South Asian countries is moderate by international standards. This, however, happens because the comparison is tainted by the nature of the monetary indicators considered in different countries. In advanced economies as well as in many Latin American countries, inequality is measured on the basis of income per capita. In South Asian countries, in contrast, most surveys convey information about consumption per capita. Within the same country, income inequality is generally higher than consumption inequality. Nonmonetary indicators provide an even starker picture.

Inequality measurement based on income or consumption also may fail to capture the full extent of disparity. This is because household surveys may not capture well the income or the consumption of the richest members of society. The survey questionnaires usually focus on the relatively basic basket of goods and services purchased by those who live around the poverty line. In so doing, they fail to capture the more diverse and sophisticated ways in which the better-off spend their money—and to remind respondents about them. Richer households also tend to shun surveys of this sort. One indication of underreporting is the size of the discrepancies between levels and growth rates of consumption, as measured by household surveys and by national accounts.

Based on Banerjee and Piketty (2005), the World Bank report suggests that individual tax returns can be used to examine the extent of undercounting of the rich in household surveys. According to this data source, the income share of India’s top 0.01 percent was in the 1.5 percent to 2 percent range, whereas the share of the top 0.1 percent was in the 3 percent to 4.5 percent range. Assuming that the top 1 percent is not captured by household surveys is not enough to account for the full gap but explains 20 percent to 40 percent of it. This indicates that traditional income- or consumption-based monetary indicators are biased downward, probably by a substantial margin.

The key findings of the report entitled: Addressing Inequality in South Asia by Martín Rama, Tara Béteille, Yue Li, Pradeep K. Mitra, and John Lincoln Newman (January 2015), World Bank (please click here to access), are as follows:

• In India, at the household level, the Gini coefficient is 0.668 for asset holdings and 0.680 for net worth. As in other countries, the wealth distribution is more concentrated than the distribution of income and especially more concentrated than that of expenditures.

• For a typical Indian household among the top 10 percent, the net worth could support consumption for more than 23 years. For a typical Indian household in the bottom 10 percent, however, the net worth was sufficient to support consumption for less than three months.

• The concentration of billionaire wealth appears to be unusually large in India. According to Forbes magazine (2014), total billionaire wealth amounts to 12 percent of gross domestic product (GDP) in 2012. As such, India is an outlier in the ratio of billionaire wealth to GDP among economies at a similar development level.

• There is no doubt that India has world-class entrepreneurs, commanding admiration for their innovation and management capacity, and many of them operate successfully in highly competitive global markets. At the same time, over a quarter of India’s billionaire wealth is estimated to be inherited, 40 percent is based on inheritance, and 60 percent originates from “rent-thick sectors,” such as real estate, infrastructure, construction, mining, telecommunications, cement, and media. This does not imply that wealth was acquired through the exercise of influence, but highlights that the potential for rent extraction exists (Gandhi and Walton 2012).

• In India, although some households fell into poverty between 2004–05 and 2009–10, more of them, about 15 percent of the total population or 40 percent of the poor, moved above the poverty line. Meanwhile, a sizable proportion of the poor and the vulnerable—over 9 percent of the total population or about 11 percent of the poor and vulnerable—moved into the middle class. Households from Scheduled Castes and Scheduled Tribes experienced upward mobility comparable to that of the rest of the population.

• Nonmonetary indicators of well-being provide a more striking picture than monetary indicators. The share of children under five who are stunted among the poorest quintile is above 50 percent in Bangladesh and Nepal and reaches 60 percent in India.

• India and Pakistan also have some of the highest infant mortality rates and under-five child mortality rates among the poor across all comparators. Of 1,000 children born in India’s poorest population quintile, 82 will die within 12 months and 117 within five years. The figures for Pakistan are 94 and 120, respectively.

• Gaps in neonatal mortality (death within the first 28 days of life) and in under-five child mortality (death within the first five years of life) between the top and the bottom quintiles are large, especially in India and Pakistan.

• In a controlled experiment in India, boys from high and low caste displayed the same ability to solve mazes under monetary incentives, but low-caste boys performed worse if the name and caste of the boys were announced at the beginning of the session. Making caste salient may have evoked in the children memories that changed how they think about themselves and their relationship with others. (Hoff and Pandey 2006, 2012).

• Some connections exist between inequality and conflict. Across irrigation communities in south India and in Nepal, inequality is found to make resolving disputes in water allocation more difficult (Bardhan 2005; Lam 1998). In the case of India, the probability of a district being affected by Naxalites (Maoist rebels) can be linked to the characteristics of the district. With the exception of Jharkhand, poverty incidence of rural areas is higher in districts where Naxalites are better implanted.

• For India, the inequality in learning outcomes can be seen by comparing test scores of children whose households have both a radio and a TV to those who have neither. The mean test scores for students in the first group are higher across the entire distribution than for those from the second group (Dundar and others 2014).

• Both education gaps and the rural-urban divide account for a growing share of consumption inequality. The share is smaller in the case of ethnicity, but caste remains relevant in northern and eastern Indian states.

• In India, caste explains more than religion in access to primary education. In the case of secondary education, gender plays a significant role in explaining secondary school attendance and completion across countries in the region. Location turns out to be a critical circumstance for access to infrastructure services.

• In India, urban households whose members are selfemployed or who work as casual labor experience stronger upward mobility and smaller downward mobility than rural households.

• India spends less than 1 percent of GDP on social protection. In India, the MGNREG Act represents a significant milestone in the design and execution of public works, supported by massive government resources. The Rashtriya Swasthya Bima Yojana health insurance program for the poor is also pathbreaking in its design though still in an early stage of development.

• India spends a substantial amount on the Public Distribution System. It covers about 20 percent of the population, much more than any other social protection program. It was found to have strong poverty reduction impacts, accounting for a significant fraction of the poverty decline between 2004–05 and 2009–10. Several states have made substantial improvements in infrastructure and delivery systems to plug leakage. However, the coverage rates were around 53 percent in rural areas and 33 percent in urban areas in 2011–12. Take-up rates were progressive across quintiles, but coverage rates of the richest 20 percent in rural areas remained high. Because of the price difference between subsidized grain and grain sold through regular marketing channels, powerful incentives exist to arbitrage and make illegal profits. In fiscal year 2004/05, the level of leakage of Public Distribution System grains countrywide was estimated to reach above 50 percent. The situation improved later: the illegal diversion and leakages declined to about 44 percent by the end of 2007/08 and to around 35 percent in 2011/12 (Himanshu 2013; Jha and Ramaswami 2010; Khera 2011).

• The bias toward food and price subsidies is especially marked in India and Pakistan. In India, the Public Distribution System is responsible for the provision of subsidized food. In fi scal year 2003/04, it absorbed about 3 percent of GDP, almost triple the average spending on food security in advanced economies. Since then the share has declined, but in fiscal year 2008/09 it still absorbed about 1 percent of GDP. This is the largest share of resources among all social protection programs: 43 billion Indian rupees, compared to around 30 billion Indian rupees devoted to MGNREG funding (Union Budget of India 2013–14, http://indiabudget.nic.in/budget2013-2014/budget.asp).

• A study covering 533 blocks in Bihar— India’s poorest state—found that one-third of them did not have any block development officers. As a result, 20 percent of the funds allocated to the state had not been spent (World Bank 2005).

• At the level of villages, increasing mobility is largely associated with occupational change. The timing and the pace have varied across countries, but the shift has consistently involved an expansion of nonfarm employment. While the new jobs are mainly casual, they have supported considerable mobility. Wages of casual nonfarm workers were 30 percent to 50 percent higher than agricultural wages in rural India, Nepal, and Pakistan in the 2000s; they were 10 percent higher in rural Bangladesh during the first half of the 2000s (World Bank 2011). Although regular jobs tend to pay better, the earnings gap between regular and casual nonfarm jobs has narrowed over time in rural India, whereas the earnings gap between casual nonfarm jobs and agricultural jobs has increased (Himanshu and others 2013).

• Contrary to expectations, the extent of mobility in South Asia turns out to be substantial. The occupations held by sons are increasingly independent from those their parents used to have, and the movement is in the direction of leaving unskilled jobs and farming. In India, mobility across generations is greater for households belonging to the Scheduled Castes and Scheduled Tribes and to Other Backward Castes than it is for higher-caste Hindus.

• Special microsurveys focusing on female migrant workers in 20 Indian states found that a significant proportion of unemployed or housebound women enter into paid employment through migration (Mazumdar, Neetha, and Agnihotri 2011).

• In India, some villages have reserved the position of chief councillor (pradhan) for women. After about seven years of exposure to a female pradhan, the gender gap in aspirations was sharply reduced for teenagers in these villages. Girls were less likely to want to be a housewife, less likely to want their in-laws to determine their occupation, and more likely to want a job that requires more education. The gender gap in educational outcomes was erased in these villages. Because little else changed in terms of actual policy or career opportunities, seeing a woman achieve the position of local head likely provided a role model and affected aspirations, efforts, and educational choices (Beaman and others 2012; Duflo 2012).

• In India, a meager 2.8 percent of the population pays personal income tax. Stepped-up efforts to increase tax collection by the ministry of finance include a unique online system for monitoring suspicious transactions through real-time coordination among revenue intelligence agencies. Yet these efforts concern a few thousand cases and less than 0.2 percent of GDP in lost tax revenue, showing that there is still some way to go (World Bank 2012).

• In India, seasonal migrants are characterized by lower economic and educational attainment than the neighbors; they also tend to come from households with smaller landholdings (Keshri and Bhagat 2012).

• Energy subsidies disproportionately benefit the better-off. In the case of the subsidies for liquefied petroleum gas (LPG) in India, the average household in the poorest quintile has less than a 20 percent probability of using LPG; in contrast, the average probability for an urban household in the richest quintile is almost 100 percent (Goutam, Lahoti, and Suchitra 2012).

• The overall system of intergovernmental transfers in India is generally progressive and leads to a more equitable distribution of fiscal resources across constituencies (Ghani, Iyer, and Misra 2013).
 
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As per the Report of the Expert Group to Review the Methodology for Measurement of Poverty (also called the [inside]Rangarajan Committee Report on Measurement of Poverty 2014[/inside]), which was submitted to the Government of India in June 2014 (Please click here to download):

•    Based on the analysis presented in the Report by Rangarajan Committee, monthly per capita consumption expenditure of Rs. 972 in rural areas and Rs. 1407 in urban areas is treated as the poverty lines at the all India level. This implies a monthly consumption expenditure of Rs. 4860 in rural areas or Rs. 7035 in urban areas for a family of five at 2011-12 prices.

•    Based on the methodology outlined in the Report, the poverty ratio at all India level for 2011-12 comes to 29.5%. Working backwards this methodology gives the estimate for 2009-2010 at 38.2%. This is in contrast to 21.9% as estimated by Tendulkar methodology for 2011-12 and 29.8% for 2009-10.

•    Compared to the poverty lines based on the methodology of the Expert Group (Tendulkar), the poverty lines estimated by the Expert Group (Rangarajan) are 19% and 41% higher in rural and urban areas, respectively.

•    The Expert Group (Rangarajan) uses the Modified Mixed Recall Period consumption expenditure data of the NSSO as these are considered to be more precise compared to the MRP, which was used by the Expert Group (Tendulkar) and the URP, which was used by earlier estimations. 67% of the increase in the rural poverty line and 28% of the increase in the urban poverty line is because of the shift from MRP to MMRP*.

•    The Expert Group (Rangarajan) estimates that the 30.9% of the rural population and 26.4% of the urban population was below the poverty line in 2011-12. The all-India ratio was 29.5%. In rural India, 260.5 million individuals were below poverty and in urban India 102.5 million were under poverty. Totally, 363 million were below poverty in 2011-12.

•    The poverty ratio has declined from 39.6% in 2009-10 to 30.9% in 2011-12 in rural India and from 35.1% to 26.4% in urban India. The decline was thus a uniform 8.7 percentage points over the two years. The all-India poverty ratio fell from 38.2% to 29.5%. Totally, 91.6 million individuals were lifted out of poverty during this period.

•    The Expert Group (Tendulkar) had used the all-India urban poverty line basket as the reference to derive state-level rural and urban poverty. This was a departure from the earlier practice of using two separate poverty line baskets for rural and urban areas. The Expert Group (under C Rangarajan) reverts to the practice of having separate all-India rural and urban poverty basket lines and deriving state-level rural and urban estimates from these.

•    The Expert Group (Tendulkar) had decided not to anchor the poverty line to the then available official calorie norms used in all poverty estimations since 1979 as it found a poor correlation between food consumed and nutrition outcomes. However , on a review of subsequent research, the Expert Group (Rangarajan) took a considered view that deriving the food component of the Poverty Line Basket by reference to the simultaneous satisfaction of all three nutrient -norms would be appropriate when seen in conjunction with the emphasis on a full range of policies and programmes for child-nutrition support and on public provisioning of a range of public goods and services aimed at the amelioration of the disease-environment facing the population.

•    The Expert Group (Rangarajan) prefers NSSO’s estimates and decides not to use the National Accounts Statistics (NAS) estimates. This is in line with the approach taken by Expert Group (Lakdawala) and Expert Group (Tendulkar).

•    Public expenditure on social services has increased substantially in recent years. These expenses are not captured, by design, in the NSSO’s Consumer Expenditure Surveys and the poverty line derived from these is thus lower than the services actually consumed.
 
•    Percentage of population living below the poverty line is found to be highest in Chhattisgarh (47.9%) and lowest in A&N Islands (6.0%) (see the table below)
 
Poverty in states
* Note: The three MPCE measures may be defined as follows.

-Uniform Reference Period MPCE (or MPCEURP): This is the measure of MPCE obtained by the NSS consumer expenditure survey (CES) when household consumer expenditure on each item is recorded for a reference period of “last 30 days” (preceding the date of survey).

-Mixed Reference Period MPCE (or MPCEMRP): This is the measure of MPCE obtained by the CES when household consumer expenditure on items of clothing and bedding, footwear, education, institutional medical care, and durable goods is recorded for a reference period of “last 365 days”, and expenditure on all other items is recorded with a reference period of “last 30 days”.

-Modified Mixed Reference Period MPCE (or MPCEMMRP): This is the measure of MPCE obtained by the CES when household consumer expenditure on edible oil, egg, fish and meat, vegetables, fruits, spices, beverages, refreshments, processed food, pan, tobacco and intoxicants is recorded for a reference period of “last 7 days”, and for all other items, the reference periods used are the same as in case of Mixed Reference Period MPCE (MPCEMRP).
 
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The Global Multidimensional Poverty Index (MPI) was created using a method developed by Sabina Alkire, OPHI Director, and James Foster, OPHI Research Associate and Professor of Economics and International Affairs at George Washington University (2011). The Global MPI 2014 is an index of acute multidimensional poverty that covers 108 countries. It directly measures the nature and magnitude of overlapping deprivations in health, education and living standard at the household level. The MPI provides vital information on who is poor and how they are poor, enabling policymakers to target resources and design policies more effectively. The Global MPI is the first international measure to reflect the intensity of poverty – the number of deprivations each person faces at the same time. It offers an essential complement to income poverty indices because it measures and compares deprivations directly, without the need for PPPs (Purchasing Power Parity rates). The MPI is built using DHS, MICS, WHS surveys and national data, 2002-2013.

Key findings of the [inside]Global Multidimensional Poverty Index (MPI) 2014[/inside] (released in June 2014) are as follows (please click here to download document 1, document 2 and document 3):

Indian scenario

• India is home to 343.5 million destitute people – 28.5% of its population is destitute.

• India is the second poorest country (in terms of MPI) in South Asia behind war-torn Afghanistan.

• Among the poor in 90 countries, inequality is high in India, Pakistan, Afghanistan, Yemen, Somalia and in 15 Sub-Saharan African countries during 2014.

• The Oxford analysis of multi-dimensional poverty reduction in India was done using National Family Health Survey datasets from 2005.


Global scenario

• The MPI 2014 covers 108 countries, which are home to 78% of the world’s population. Thirty percent of them – 1.6 billion people – are identified as multidimensionally poor.

• Of the 1.6 billion identified as MPI poor, 85% live in rural areas; significantly higher than income poverty estimates of 70 to 75%

• Of these 1.6 billion people, 52% live in South Asia, and 29% in Sub-Saharan Africa. Most MPI poor people - 71% - live in Middle Income Countries

• The country with the highest percentage of MPI poor people is still Niger; 2012 data from Niger shows 89.3% of its population are multidimensionally poor

• Nearly all countries that reduced MPI poverty also reduced inequality among the poor

• Of the 1.6 billion identified as MPI poor, 85% live in rural areas; significantly higher than income poverty estimates of 70-75%

• Of 34 countries for which we have time-series data, 30 - covering 98% of the MPI poor people across all 34 - had statistically signi!cant reductions in multidimensional poverty

• The countries that reduced MPI and destitution most in absolute terms were mostly Low Income Countries and Least Developed Countries

• Nepal made the fastest progress, showing a fall in the percentage of the population who were MPI poor from 65% to 44% in a five-year period (2006-2011)

• Nearly all countries that reduced MPI poverty also reduced inequality among the poor

• Across the 49 countries analysed so far, half of all MPI poor people are destitute; over 638 million people

• Overall in South Asia, over 420 million people are destitute

• In Niger, 68.8% of the population is destitute – the highest share of any country
 
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Please click here to access the key messages of the report entitled: [inside]Humanity divided: Confronting inequality in Developing Countries, UNDP (January, 2014)[/inside]. 
 
According to the report entitled: [inside]From poverty to empowerment: India’s imperative for jobs, growth, and effective basic services (2014)[/inside], produced by McKinsey Global Institute (MGI) (please click here to download the report):

•    The Empowerment Line prepared by McKinsey Global Institute (MGI) reveals that 56 percent of India’s population lacks the means for a minimum acceptable standard of living

•    Based on Empowerment Line, some 680 million Indians are deprived—more than 2.5 times the population of 270 million below the official poverty line. Overall, the Empowerment Line’s minimum standards of consumption are approximately 1.5 times higher than those implicit in the official poverty line. Consumption requirements for health (including drinking water and sanitation) and education are 5.5 and 3.8 times higher, respectively, reflecting the minimum cost of meeting these essential needs.

•    India’s Empowerment Line stands at Rs. 1,336 per capita per month, or almost Rs. 6,700 for a family of five per month. As of 2012, the consumption levels of almost 680 million people across both urban and rural areas of the country fell short of this mark. This far outstrips the 270 million Indians below the official poverty line.

•    At a more detailed level, the Empowerment Line is set some 38 percent higher for urban India than for rural India. Based on this benchmark, 171 million urban residents (or 44 percent of the urban population) were below the Empowerment Line, compared with 509 million rural residents (or 61 percent of the rural population).

•    The Empowerment Gap, or the difference between each person’s current consumption and the levels called for in the Empowerment Line, is about Rs. 332,000 crore ($69 billion) per year, or 4 percent of GDP. This is seven times larger than the Rs. 50,000 crore ($10 billion) poverty gap (that is, the difference between the current consumption of India’s officially poor and the level implicit in the government’s poverty line).

•    McKinsey Global Institute (MGI) has classified three segments of the population according to their depth of poverty. Some 57 million Indians are classified as “excluded”; they are the poorest of the poor, unable to afford minimal food, shelter, and fuel. An additional 210 million are impoverished”, with consumption above bare subsistence levels but still below the official poverty line. Just above the official poverty line, some 413 million Indians are “vulnerable”. They have only a tenuous grip on a better standard of living; shocks such as a lost job or a bout of illness can easily push them back into extreme poverty.

•    Apart from income-based deprivation, India’s people also lack access to 46 percent of the basic services they require. Health care, clean drinking water, and sanitation-these basic services make up the largest share (39 percent) of the cumulative Empowerment Gap of Rs. 332,000 crore ($69 billion).

•    In order to complement the Empowerment Line, McKinsey Global Institute (MGI) introduced a second parameter to measure this: the Access Deprivation Score (ADS), which captures the availability of basic services at the national, state, or even the district level. The ADS metric reveals that, on average, Indian households lack access to 46 percent of the basic services they need.

•    Three-quarters of the reduction in the Empowerment Gap achieved from 2005 to 2012 was due to rising incomes, while one-quarter was due to increased government spending on basic services. The contribution of rising incomes could have been even higher, however, if India had created non-farm jobs at a faster pace and boosted agricultural productivity—and the recent economic slowdown has stalled further progress on these fronts.

•    If India’s recent weak economic momentum persists in the coming decade, in what McKinsey Global Institute (MGI) has termed the “stalled reforms scenario”, some 470 million people, or 36 percent of India’s population, would remain below the Empowerment Line in 2022 and as much as 12 percent would remain below the official poverty line.

•    India can bring more than 90 percent of its people above the Empowerment Line in just a decade by implementing inclusive reforms. The inclusive reforms scenario hinges on four key elements: a. Accelerating job creation; b. Raising farm productivity; c. Increasing public spending on basic services; and d. Making basic services more effective.

•    Job growth in non-farm sectors combined with productivity growth in agriculture would directly contribute to lifting more than 400 million people above the Empowerment Line, or more than 70 percent of the total impact in the inclusive reforms scenario. India needs to create 115 million non-farm jobs through cross-cutting reforms and targeted public investment.

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Please click here to access the salient findings of 69th Round of NSS regarding [inside]Key Indicators of Urban Slums in India (July 2012 to December 2012)[/inside]. 
 
Please click here to download the full report Key Indicators of Urban Slums in India, NSS 69th Round, July 2012-December 2012, MoSPI.
 
Please click here to access the 32nd report by the Standing Committee on Finance (2010-11) entitled: [inside]Appraisal of BPL Criteria[/inside]. 
 
According to the [inside]Press Note on Poverty Estimates, 2011-12[/inside], Planning Commission, July, 2013 (please click here to access the report):

•    The percentage of persons below the Poverty Line in 2011-12 has been estimated as 25.7% in rural areas, 13.7% in urban areas and 21.9% for the country as a whole.

•    In 2011-12, India had 270 million persons below the Tendulkar Poverty Line as compared to 407 million in 2004-05, that is a reduction of 137 million persons over the seven year period.

•    The respective poverty ratios for the rural and urban areas were 41.8% and 25.7% and 37.2% for the country as a whole in 2004-05. It was 50.1% in rural areas, 31.8% in urban areas and 45.3% for the country as a whole in 1993-94.

•    During the 11-year period 1993-94 to 2004-05, the average decline in the poverty ratio was 0.74 percentage points per year. It accelerated to 2.18 percentage points per year during the 7-year period 2004-05 to 2011-12. Therefore, it can be concluded that the rate of decline in the poverty ratio during the most recent 7-year period 2004-05 to 2011-12 was about three times of that experienced in the 11-year period 1993-94 to 2004-05.

•    State-wise, poverty ratio was highest in Chhattisgarh (39.93%) followed by Jharkhand (36.96%), Manipur (36.89%), Arunachal Pradesh (34.67%) and Bihar (33.74%).

•    Goa (5.09%) has the least percentage of people living below poverty line followed by Kerala (7.05%), Himachal Pradesh (8.06%), Sikkim (8.19%), Punjab (8.26%) and Andhra Pradesh (9.20%).

•    For 2011-12, for rural areas the national poverty line using the Tendulkar methodology is estimated at Rs. 816 per capita per month (i.e. Rs. 27.2 per capita per day) and Rs. 1,000 per capita per month (i.e. Rs. 33.3 per capita per day) in urban areas.

•    For a family of five, the all India poverty line in terms of consumption expenditure would amount to about Rs. 4,080 per month in rural areas and Rs. 5,000 per month in urban areas. These poverty lines would vary from State to State because of inter-state price differentials.

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The National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation has released the key indicators of household consumer expenditure in India, generated from the data collected during July 2011–June 2012 in its 68th round survey. The Central Sample consisted of 7,469 villages in rural areas and 5,268 urban blocks spread over all States and Union Territories.

Some salient findings of the report titled [inside]Key Indicators of Household Consumer Expenditure in India: 68th round NSS (2011-12)[/inside] relating to monthly per capita expenditure (MPCE) based on modified mixed reference period (MMRP)** are as follows (click here to know more):

•    The all-India estimate of average MPCE was around Rs.1430 for rural India and about Rs. 2630 for urban India. Thus average urban MPCE was about 84% higher than average rural MPCE for the country as a whole, though there were wide variations in this differential across States.

•    The bottom 5% of the population had an average monthly per capita expenditure of Rs. 521.44 in rural areas and Rs. 700.50 in urban areas.

•    The top 5% of the population had an average monthly per capita expenditure of Rs. 4481.18 in rural areas and Rs. 10281.84 in urban areas.

•    For rural India, the 5th percentile of the MPCE distribution was estimated as Rs. 616 and the 10th percentile as Rs. 710. The median MPCE was Rs. 1198. Only about 10% of the rural population reported household MPCE above Rs. 2296 and only 5% reported MPCE above Rs. 2886.

•    For urban India, the 5th percentile of the MPCE distribution was Rs. 827 and the 10th percentile, Rs. 983. The median MPCE was Rs. 2019. Only about 10% of the urban population reported household MPCE above Rs. 4610 and only 5% reported MPCE above Rs. 6383.

•    For the average rural Indian, food accounted for 52.9% of the value of consumption during 2011-12. This included 10.8% for cereals and cereal substitutes, 8% for milk and milk products, 7.9% on beverages, refreshments and processed food, and 6.6% on vegetables. Among non-food item categories, fuel and light for household purposes (excluding transportation) accounted for 8%, clothing and footwear for 7%, medical expenses for 6.7%, education for 3.5%, conveyance for 4.2%, other consumer services (excl. conveyance) for 4%, and consumer durables for 4.5%.

•    For the average urban Indian, 42.6% of the value of household consumption was accounted for by food, including 9% by beverages, refreshments and processed food, 7% by milk and milk products, and 6.7% by cereals and cereal substitutes. Education accounted for 6.9%, fuel and light for 6.7%, conveyance for 6.5%, and clothing & footwear for 6.4%.

** Note: Using Schedule 1.0 Type 2, Monthly per Capita Consumer Expenditure with a mixed reference period where a reference period of 365 days was used for all items of consumer expenditure in Category I, a reference period of 7 days was used for all items of consumer expenditure in Category II and a reference period of 30 days was used for all items of consumer expenditure in Category III. 

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According to the paper titled: [inside]"The State of the Poor: Where are the Poor and Where are the Poorest?" (2013)[/inside] by Pedro Olinto and Hiroki Uematsu, using data released in the latest World Development Indicators,
http://www.worldbank.org/content/dam/Worldbank/document/State_of_the_poor_paper_April17.pdf

•    India accounts for one-third (up from 22 percent in 1981) of the world poor in 2010 and China comes next contributing 13 percent (down from 43 percent in 1981). People living on less than USD 1.25 (about Rs 65) per day are considered as poor.

•    1.2 billion persons still living in extreme poverty across the world.

Using past studies, the [inside]Report of the Expert Group to Recommend the Detailed Methodology for Identification of Families Living below Poverty Line in the Urban Areas[/inside], Planning Commission 2012, Perspective Planning Division, http://www.im4change.org/docs/655rep_hasim1701.pdf has found:

•    A comparison of the Gini coefficient* (a measure of consumption inequality) estimated on the basis of MPCE data provided by the NSSO using the Uniform Recall Period (URP) Consumption method indicates that the extent of inequality in the consumption expenditure is higher in urban areas as compared to the rural areas. The Gini ratio for rural areas declined from 0.30 in 2004-05 to 0.29 in 2009-10 and for urban areas it increased from 0.37 to 0.38 during the same period.

•    Rural Gini started declining from 1977-78 till 1993-94, it rose by 0.02 points during 2004-05 and again declined by 0.01 points in 2009-10. However urban inequality has been increasing almost steadily over the years. Urban Gini rose from 0.27 in 1973-74 to 0.34 in 1977-78 to 0.38 in 2009-10. Compared to the same Gini ratio of 0.34, for both rural and urban areas in 1977-78, the gap between them rose to as high as 0.09 points in 2009-10.

•    According to the 65th round of the NSSO** in 2008-09, about 49 thousand slums were estimated to be in existence in urban India in 2008-09, 24% of them were located along nallahs and drains and 12% along railway lines. For 95% slums, the major source of drinking water was either tap (usually public tap) or tubewell. About 73% notified and 58% non-notified slums had a motorable approach road. About 10% notified and 23% non-notified slums did not have any drainage facility. Only 1% notified and 7% non-notified slums did not have electricity connection. About 78% of notified slums and 57% of the non-notified slums had a pucca road inside the slum.

•    A study by the National Institute of Urban Affairs (NIUA), quoted by the National Commission on Urbanisation (NCU), 1988 (ibid.), points out that 68 per cent of the urban poor are women, who are socially treated as expendable and entitled to the poorest nutrition and health care. Single women headed households and girl children are particularly assailable in these circumstances.

•    According to NIUA survey, the 15 most dominant occupations of the poor are: weavers (8.3 per cent), sweepers (6.5 per cent), unskilled labourers (6.3 per cent), street vendors (5.4 per cent), construction workers (5.3 per cent), rickshaw pullers (5.3 per cent), peons (4.1 per cent), domestic servants (3.5 per cent), petty shopkeepers (3.2 per cent), agricultural labourers (3.0 per cent), rag pickers (2.8 per cent), bidi makers (2.7 per cent), drivers (2.6 per cent), petty salesmen (2.2 per cent), and clerks (1.9 per cent).

•    The 2009 National Commission for Enterprises in the Unorganised Sector (NCEUS) report estimates that an overwhelming proportion of workers belonging to the poor and vulnerable groups (between 94% and 98%) are informal workers, while they constitute a much smaller proportion of the work force in the middle or higher income groups. The growth rate of employment also was much less among the poor and vulnerable groups compared to the Middle and Higher income groups. In other words, both in terms of quantity and quality of employment, the poor and vulnerable groups had been lagging far behind the others during the period of rapid economic growth (1993-2004).

Note:

* A Gini of zero denotes absolute equality, while a value of 1 (or 100 on the percentile scale) means absolute inequality

** Ministry of Statistics and Programme Implementation,Government of India. 2009. ‘Some Characteristics of Urban Slums’. National Sample Survey Office, National Statistical Organisation. Report No. 534(65/0.21/1)

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According to the [inside]Press Note on Poverty Estimates, 2009-10[/inside], Planning Commission, March 2012,
http://planningcommission.gov.in/news/press_pov1903.pdf

•    The all-India head count ratio (HCR) has declined by 7.3 percentage points from 37.2% in 2004-05 to 29.8% in 2009-10, with rural poverty declining by 8.0 percentage points from 41.8% to 33.8% and urban poverty declining by 4.8 percentage points from 25.7% to 20.9%. 

•    Poverty ratio in Himachal Pradesh, Madhya Pradesh, Maharashtra, Orissa, Sikkim, Tamil Nadu, Karnataka and Uttarakhand has declined by about 10 percentage points and more. 

•    In Assam, Meghalaya, Manipur, Mizoram and Nagaland, poverty in 2009-10 has increased. 

•    Some of the bigger states such as Bihar, Chhattisgarh and Uttar Pradesh have shown only marginal decline in poverty ratio, particularly in rural areas.

Poverty ratio for Social Groups

•    In rural areas, Scheduled Tribes exhibit the highest level of poverty (47.4%), followed by Scheduled Castes (SCs), (42.3%), and Other Backward Castes (OBC), (31.9%), against 33.8% for all classes. 

•    In urban areas, SCs have HCR of 34.1% followed by STs (30.4%) and OBC (24.3%) against 20.9% for all classes. 

•    In rural Bihar and Chhattisgarh, nearly two-third of SCs and STs are poor, whereas in states such as Manipur, Orissa and Uttar Pradesh the poverty ratio for these groups is more than half.

For occupational categories

•    Nearly 50% of agricultural labourers and 40% of other labourers are below the poverty line in rural areas, whereas in urban areas, the poverty ratio for casual labourers is 47.1%.

•    As expected, those in regular wage/ salaried employment have the lowest proportion of poor. In the agriculturally prosperous state of Haryana, 55.9% agricultural labourers are poor, whereas in Punjab it is 35.6%.

•    The HCR of casual laborers in urban  areas is very high in Bihar (86%), Assam (89%), Orissa (58.8%), Punjab (56.3%), Uttar Pradesh (67.6%) and West Bengal (53.7%).

* The head count ratio (HCR) is obtained using urban and rural poverty lines, which are applied on the Monthly per capita Expenditure (MPCE) distribution of the states.

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According to the report entitled: [inside]Born Equal: How reducing inequality could give our children a better future (2012)[/inside], Save the Children,
http://www.savethechildren.org.uk/sites/default/files/images/Born_Equal.pdf

•    Gini coefficient [which takes a value of 1 (or 100 on the percentile scale) for perfect inequality and 0 for perfect equality] increased from 32.0 percent in 1980 (or earliest available) to 36.8 percent in 2012 (or latest available) in India. On the contrary, in Brazil, Gini coefficient declined from 55.3 percent in 1980 (or earliest available) to 52.0 percent in 2012 (or latest available).

•    India and China, home to huge numbers of the world’s poor, are increasingly sheltering some of the world’s richest people. In 2002, India was home to four billionaires ($US); presently the number is 55. In 2002, China claimed only one billionaire. In Forbes’ 2012 survey China recorded 115–more than Germany, France and Japan combined.

•    In India, while the country’s average poverty rates were falling in the 2000s, in the state of Odisha poverty increased from 41% to 50%; absolute poverty among lower castes in Odisha increased during that decade from 57% to 74%.

•    In India, the worst 25 districts in terms of infant mortality (as per the 2011 census) are concentrated across three states–Assam, Bihar and Madhya Pradesh. Not surprisingly, these states are amongst the poorest in terms of per capita state domestic product (SDP), ranking 27, 30 and 28 respectively out of 30 states in the SDP data available for 2009–10.

•    After studying 32 countries, the report demonstrates that children born into the richest households have access to 35 times the resources of the poorest. Children born in rich households get better healthcare, more nutritious food and improved access to school. Such children do not have to start work at an early age. Thus, they are less likely to become child labourers.

•    A person born as a dalit in India will be twice as likely to live one\\\\\\\\\\\\\\\'s entire life in poverty. Dropout rates among children in the scheduled tribe and scheduled caste categories are substantially higher. Save the Children report alleges that India has witnessed reductions in social spending overtime.

•    India’s income inequality, meanwhile, has been shown to result in higher levels of both undernutrition and obesity in children. Subramanian et al show that state level income inequality was strongly associated with the levels of Body Mass Index (BMI). A change of one standard deviation of the Gini coefficient (which amounts roughly to a 3% change) increased the risk of being underweight by 19% and the risk of being obese by 21%, depending on the direction of change. The study concluded that the simultaneous existence of both undernutrition and overnutrition suggests the blame lies with inequality (a skewed distribution of food), rather than general poverty (an overall shortage).

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According to the [inside]UNCTAD 2012 report entitled Policies for Inclusive and Balanced Growth[/inside], released on 12 September, 2012,
http://unctad.org/en/PublicationsLibrary/tdr2012_en.pdf:

•    India's Gini coefficient* for consumption has risen from 0.31 in 1993-94 to 0.36 in 2009-10. A rising trend in inequality could be attributed to gains from growth being concentrated among surplus-takers (which include profits, rents and financial incomes).

•    The UNCTAD 2012 report has observed that the manufacturing sector in India could not generate sufficient employment opportunities and most of the labour force is still employed in the low remuneration informal sector and low productivity agriculture. Wage shares in total national income in the organized sector have been falling since the early 1990s.

•    The top 1 percent held a much larger share of the total wealth of the economy than the bottom 50 percent. For example, 15.7 percent compared with 8.1 percent in India in 2002-03 and their share of wealth is significantly higher than their share of income (9.0 percent share in total income by top 1 percent in India in 2002-03). The UNCTAD report has argued that high inequality deprives people of access to education and credit and prevents the expansion of domestic markets.

•    The UNCTAD 2012 report has commended the Indian Government for adopting a $5 billion plan to provide free medical care to the poorest 50 percent of the population in 2012. If generic drugs were to be used in the programme then the policy of the Government would improve access to health care and strengthen the domestic pharmaceutical industry, anticipated the report. 

* A Gini of zero denotes absolute equality, while a value of 1 (or 100 on the percentile scale) means absolute inequality.

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According to the ADB report entitled: [inside]Asian Development Outlook 2012: Confronting Rising Inequality in Asia[/inside], http://www.adb.org/sites/default/files/pub/2012/ado2012.pdf:

•    Poverty as measured by head count ratio may have dropped in India by 7.3 percentage points from 37.2% in 2004-05 to 29.8% in 2009-10 but the decline could have been much more had the country been more equal. To the dismay of pro market economists, the report tells that had inequality remained unchanged from the 1990s to the 2000s, the poverty headcount rate in India could have been brought down to 29.5% in 2008, instead of the actual 32.7%.

•    It is a widely held belief that growth ultimately trickles down to the poor living at the bottom, thus reducing poverty. However, the new report finds that rising inequality due to growth has affected poverty reduction.

•    People’s Republic of China (PRC) and India—the world’s two most populous countries—with annual GDP growth rates of 9.9% and 6.4%, respectively have witnessed rise in inequality from the early 1990s to the late 2000s. During the period of economic reforms, Gini coefficient*—a common measure of inequality—deteriorated from 32.4 in 1990 to 43.4 in 2008 in the PRC and from 32.5 in 1993 to 37 in 2010 in India.

•    In  India,  the urban Gini  grew  from  34.4  in  1993  to  39.3  in 2010, much faster than the contemporaneous growth of the rural Gini, from 28.6 to 30.5. India’s rural inequality is lower and urban inequality is higher than in the PRC and, unlike the PRC but like most developing countries, India’s urban inequality is higher than its rural inequality.

•    The yawning gap between the rich and the poor in India could be observed from the ratio of the per capita expenditure of the top 20% to that of the bottom 20%. The quintile ratio has increased from 4.8 in 1993 to 5.7 in 2010. In India, the annual mean per capita expenditure growth was only 1.1% for the bottom quintile but 1.9% for the top quintile during 1993-2010. Rising inequality in India has been driven by income redistribution to the top 20%, at a cost to the bottom 80%.

•    The average annual growth rate of labor productivity was 7.4% during 1990–2007, while average annual real wage growth rate was only 2%. Gains in productivity were not passed on to wages and, consequently, the labor share of India’s organized manufacturing sector declined from 37% in 1990 to 22% in mid 2007 in India.

•    Wage employment elasticity of growth fell from 0.44 in 1991–2001 to 0.28 in 2001–2011 in PRC and from 0.53 to 0.41 in the case of India thus showing jobless growth.

•    Income inequality is caused by inequality of opportunity in developing Asia. Inequality of opportunity arises out of unequal access to public services, especially education and health. In some Asian countries including India where the average proportion of out-of-school primary school-age children was about 20% in 1999–2003, children from the poorest quintile were three times as likely as those from the richest quintile to be out of school. Infant mortality rates among the poorest households in some Asian countries were double or treble the rates among the richest households. The chance of a poor infant dying at birth was more than 10 times higher than for an infant born to a rich family in Asia.

•    Although average Gini coefficient across developing Asian economies (38) was lower than that in Latin American economies (52), most Latin American countries have seen narrowing inequality in the last 2 decades.

* Note: A Gini of zero denotes absolute equality, while a value of 1 (or 100 on the percentile scale) means absolute inequality.

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Please click here to access the key findings of the [inside]Suresh Tendulkar Committee Report on poverty[/inside], which was submitted in 2009.
 
According to the [inside]11th Five-Year Plan of the Planning Commission[/inside]
http://www.planningcommission.nic.in/plans/planrel/fiveyr/11th/11_v3/11v3_ch4.pdf:  

•    India has successfully reduced the share of the poor in the population by 27.4 percentage points from 54.9 in 1973 to 27.5 in 2004. Between 1973 and 1983, the HCR of the poor had declined from 54.9% to 44.5%, and it fell further to 36% in 1993–94 and to 27.5% by 2004–05

•    Some States have been particularly successful in reducing the share of the poor in the total population. In 2004–05, the States with the lowest HCR were J&K (5.4%), Punjab (8.4%), Himachal Pradesh (10%), Haryana (14%), Kerala (15%), Andhra Pradesh (15.8%), and Gujarat (16.8%); at the other end of the spectrum are Orissa (46.4%), Bihar (41.4%), Madhya Pradesh (38.3%), and Uttar Pradesh (32.8%)—which also happen to be among the most populous States of India.

•    The States that were formed recently (Chhattisgarh 40.9%, Jharkhand 40.3%, Uttarakhand 39.6%) have among them the highest poverty ratio

•    Four States account for nearly 58% of India’s poor population in 2004–05: Uttar Pradesh (19.6%), Bihar (12.23%), Madhya Pradesh (8.3%) and Maharashtra (10.5%). In 1983, these States (including undivided Bihar and Madhya Pradesh) accounted for 49% of India’s total poor population

•    The number of the poor barely changed over the last three decades, remaining constant over two decades before falling (3213 lakhs in 1973, 3229 lakhs in 1983, 3204 lakhs in 1993–94) to 3017 lakhs in 2004–05

•    In some States, the absolute numbers of the poor in the population has actually increased over the last three decades: in Uttar Pradesh (including Uttaranchal) from 535.7 lakhs in 1973 to 626 lakhs in 2004–05; in Rajasthan from 128.5 lakhs to 134.9 lakhs; in Maharashtra from 287.4 lakhs to 317.4 lakhs, and in Nagaland from 2.9 lakhs to 4.0 lakhs. The total number of poor has also increased in Madhya Pradesh (including Chhattisgarh) taken together from 276 lakhs to 341 lakhs and in Bihar (including Jharkhand) from 370 lakhs to 485.5 lakhs over the same period.

•    There are many States where the number of poor overall has remained roughly constant over the last two decades: Haryana, Himachal Pradesh, Orissa, and Mizoram.

•    There are states that have succeeded in reducing the absolute number of the poor in rural areas over the three decades from 1973 to 2004–05: Andhra Pradesh from 178.2 lakhs to 64.7 lakhs; Karnataka from 128.4 lakhs to 75 lakhs; Kerala from 111.4 lakhs to 32.4 lakhs; Tamil Nadu from 172.6 lakhs to 76.5 lakhs; and West Bengal from 257.9 lakhs to 173.2 lakhs.

•    The number of poor in rural areas in the country as a whole has declined from 2613 lakhs in 1973 to 2209 lakhs in 2004–05.

•    In urban areas the numbers of the poor has gone on increasing from 600.5 lakhs in 1973 to 808.0 lakhs in 2004–05.

•    Agricultural labour households accounted for 41% of rural poor in 1993–94 as well as in 2004–05.

•    Among social groups, SCs, STs, and backward castes accounted for 80% of the rural poor in 2004–05.

•    The mean body mass index (BMI) for SCs, STs, and OBCs is 5–10% below that for Others, and very close to the cut-off for malnutrition (>18.5). [BMI is a measure of a person’s nutritional status (weight for height, measured in kg per square metre, sq m, of height.)]

•    The percentage of female persons living in poor households was 28% in rural and 26% in urban areas in 1993–94, and 29 and 23 respectively in 2004–05. In contrast, the percentage of male persons living in poverty was 27 in rural and 26 in urban areas in 1993–94, and 27 and 23 in 2004–05. The lower percentage of female persons among the poor despite higher female poverty ratio was due to an adverse sex ratio—which itself is a reflection of the discrimination that women and girls face over their life-cycle.

•    The percentage of children below 15 years living in below poverty line (BPL) households constituted 39 in rural and 41 in urban areas in 1993–94 and 44 in rural and 32 in urban areas in 2004–05. Among the poor population, the percentage of children increased from 44 in rural and 39 in urban areas in 1993–94, to 46 and 42 respectively in 1999–2000.