Is India Losing Fight Against Poverty

Table of Contents

The World Bank has warned in its draft India Development Update (IDU) that,
The country is at “risk of losing its hard-won gains against poverty“, ET has learnt.
It also said that several households are “likely to slip back into poverty.

The IDU report until June 2020, the draft has been shared with the government.
The finance ministry is believed to have circulated the draft among stakeholder ministries.

3 Potential risks identified by World bank

Lockdown measures are extended and mobility remained “significantly constrained“ over the second quarter;
Additional strains on the financial sector;
Further deterioration of the global outlook.
India may see a reversal of gains made between 2011 and 2015
When the poverty rate dropped from 21.6% to 13.4%, based on the international poverty line.

The international poverty line is a monetary threshold under which an individual is considered to be living in poverty.
It is calculated by taking the poverty threshold from each country—given the value of the goods needed to sustain one adult—and converting it into dollars.
The current international poverty line is $1.90 per day.

These households are likely to slip back into poverty due to income and job losses triggered by Covid-19.
The draft also emphasized the vulnerabilities of 90% of India’s workforce in the informal sector.
Migrants face the deepest risks due to a static social protection system in India, inter-state migrants are at acute risk of increased poverty and destitution
On the economic front, the draft IDU said the Indian economy will contract in FY21 by over 3% and
That the rebound will be “muted” in FY22.

The World Bank observed that the fiscal impact of the economic stimulus package, though pegged at Rs 20 lakh crore, was limited by way of central government spending.
The spending was estimated by experts at 7-1.2% of GDP in the current financial year.

According to the UN, India lifted 271 million people out of extreme poverty between 2005-06 and 2016-17.
The UN report looks at three scenarios of 5%, 10% and 20% contraction in GDP to estimate the additional people who would become poor.