RICH COUNTRY OF POOR PEOPLE

The five half-truths that explain why millions of Indians remain poor

Quartz india
Quartz india

In per-capita terms, India is twice as poor as the average country. Widespread poverty in a country that is a fast-rising economic power is in large part a result of misconceptions and unhelpful attitudes and not so much a consequence of resource shortages or lack of good intentions. Poverty is not more speedily reduced because of the ways in which it is visualized and addressed by the policymakers—a product of five half-truths that have dominated the discussion.

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The half-false nature of half-truth 1: Persistent poverty in a growing economy

The official story is that poverty in India has steadily fallen, a consequence of economic growth in the 1990s and later. Government statistics show that the share of the population below the national poverty line fell from 45 per cent in 1993 to 37 per cent in 2004 and further to 22 per cent by 2011. Since the country’s economy was growing fast during this period, it seemed easy to connect the two things and claim that it was national economic growth that had caused the observed rapid reduction in poverty.

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Though it has been adjusted a few times recently, India’s poverty line at the time of writing is still among some of the lowest in the world, set at a level lower even than the one applied by some of the least-developed countries. The claim, however, about rapid poverty reduction has been advanced on the basis of this penurious definition. If one were to work, instead, with the median developing country poverty line of $3.10/day—a more appropriate standard, given India’s present circumstances—the extent of poverty reduction is decidedly smaller. Between 1993 and 2009, a period of rapid national growth, the share of the population below the $3.10 poverty line fell by less than half as much as the share below the low national poverty level. The total number of $3.10-poor people increased over the same period. Among all countries, India has the largest number of $3.10-poor people. Nearly 60 per cent of the country’s population, and more than 70 per cent of rural India, were poor by this definition in 2015.

Exposing half-truth 2: It’s not about average incomes

For many who depend upon agriculture, the vicissitudes of the seasons add another source of risk and fluctuation. No particular month’s income (or expenditure) provides an accurate reflection of such a family’s usual circumstances. If calculations of monthly expenditures are made right after the harvest, then one gets one set of poverty numbers, but if these calculations are made, instead, in the months of the monsoon, the hardest time of the year, when money and food supplies are both running low and there are many diseases, then a much larger number of households will be found in poverty.

India, together with other developing countries, has a large number of people who experience wide fluctuations in their economic circumstances. Many among them cycle in and out of poverty, never quite escaping its clutches. The numbers of these people are not separately counted by official agencies, and because their existence is not recognized, no particular assistance has been provided. Smaller-scale studies have helped cover this important gap in poverty knowledge. Undertaken in different parts of India, these studies show that between 55 and 88 per cent of all households had experienced poverty for the entire year or for shorter periods. These numbers are much larger than the official poverty estimate, and in many ways they more accurately reflect the everyday lives of poorer people.

The other half of half-truth 3: Falling into poverty

In the aggregate view of poverty that dominates the policy discussion, the notion of poverty reduction has been equated with the task of moving people out of poverty. The parallel questions are rarely posed: How do people come to be poor in the first place? Was everyone who is poor today born into poverty?

Undoubtedly, one part of poverty is transmitted from one generation to the next.

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Contrarily, many other households that were not poor earlier have fallen into chronic poverty. Recent evidence, collected by disaggregated studies, shows that falling into poverty is widespread in India and in other countries.

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Between one-third and one-half of all poor people were not born to poverty, the results show; these people have become poor within their lifetimes. Poverty has an essentially dynamic and two-faced nature: many people fall into poverty, becoming the future poor, even as others, formerly poor, move out of poverty.

Half-truth 4: Narrow escapes

Does it matter whether some individual rising above the $1.90 poverty line achieves a new income level of $2.15 or of $5.50? It does, of course, but not in official circles, where each type of ascent counts equally in the tally of progress.

A singular focus upon the aggregate number, upon quantity rather than quality, has led to two kinds of tunnel vision among planners of anti-poverty measures. Officials assess poverty in terms of the share of the poor in the total population. But neither do they pay heed to how many people actually escaped poverty (and how many fell into poverty) nor are they usually concerned with how high above the poverty line different individuals have ascended.

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Official statistics do not help distinguish between the number of poverty escapes that were of a marginal kind (a rise from $1.90 to $2.15) and how many others moved far beyond the zone of poverty (say, to the $5.50 level). In the official count, every escape from poverty is totted up as a success, even those that are marginal and temporary.

Probing half-truth 5: How effective are the existing national programmes?

What the Indian government has been doing for reducing poverty is impressive in its scale of operation.

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Two problems limit the impact, however, of this approach to poverty reduction. The first problem arises from an assumption inherent to the top-down and aggregative view, namely that poverty across the land will respond similarly to the same intervention: that what works in Assam will also work in Tamil Nadu; within large states, some the size of France or England, the same policies and programmes can be followed; that settlements across the land are essentially homogeneous: beyond–5 km villages need the same supports as those located closer to cities.

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A second problem with the national programmes that have been implemented has to do with the theory underlying this approach to poverty reduction.

These programmes do not address the reasons underlying poverty flows: they are not aimed at preventing or slowing down the flow into poverty, and they do little to improve the extent, far less raise the quality, of escapes from poverty. This inattention has been costly in terms of longer-term impacts of national programmes. While they help make the conditions of poverty easier to deal with, they do not nurture people’s capacities to move out, and stay out, of poverty on a permanent basis.

Excerpted with permission from Penguin Random House from the book The Broken Ladder, authored by Anirudh Krishna. We welcome your comments at ideas.india@qz.com.

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