Poverty reductions in rural areas were more pronounced than in urban areas

Extreme poverty in India is 12.3 percentage points lower in 2019 than in 2011 with greater poverty reductions in rural areas, a World Bank Policy Research Paper has found.

The paper authored by Sutirtha Sinha Roy and Roy van der Weide titled ‘Poverty in India Has Declined over the Last Decade But Not As Much As Previously Thought’ sheds light on how poverty and inequality have evolved since 2011.

Findings of this paper suggest that the poverty headcount rate in India is estimated to have declined by 12.3 percentage points since 2011.

“Our preferred estimates suggest that the poverty head-count rate is 10.2 percent in 2019, down from 22.5 percent in 2011,” the paper states.

“Second, reductions in rural areas are more pronounced than in urban areas. Rural and urban poverty dropped by 14.7 and 7.9 percentage points during 2011-2019,” it informs.

“Third, urban poverty rose by 2 percentage point in 2016 (coinciding with the demonetization event) and rural poverty rose by 10 basis points in 2019 (coinciding with a slowdown in the economy),” the paper further states.

“Fourth, we observe a slight moderation in consumption inequality since 2011, but by a margin smaller than what is reported in the unreleased NSS-2017 survey,” it mentions.

“Finally, the extent of poverty reduction during 2015-2019 is estimated to be notably lower than earlier projections based on growth in private final consumption expenditure reported in national account statistics,” the paper notes.

The paper’s analysis stops just before the lockdown measures were imposed due to Covid-19 and therefore cannot speak to changes in poverty headcounts in the aftermath of the pandemic.

Further, the World Bank Paper bases its analysis on the expenditure survey released by India’s National Sample Survey organization that dates back to 2011, which is when India last released official estimates of poverty and inequality.

It uses a new household panel survey, the Consumer Pyramids Household Survey conducted by a private data company.