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World Bank’s new poverty norms find larger number of poor in India

Special Correspondent

NEW DELHI: With an upward revision in its international poverty line norm from $1 a day, a World Bank study has revealed that nearly five out of 10 Indians are living on less than $1.25 (approx. Rs. 55) a day. And what is worse, their number is on the rise, despite a fall in percentage terms.

In its update on ‘International Comparison Programme’ released on Tuesday, the World Bank said that out of an estimated population of about 100 crore in 2005, “the number of poor people living below $1.25 a day has increased from 42.1 crore in 1981 to 45.6 crore in 2005. This is the biggest challenge facing India.”

The study also pointed out that even as the number of people living on the earlier poverty line norm of less than $1 a day had come down, there was still a large number of people living just above this line of deprivation and their numbers were not falling either.

As per the revised estimates on poverty based on new purchasing power parity norms, India’s poverty rate fell by a mere 19 per cent between 1990 and 2005 as compared to a global decline of 38 per cent . In terms of a dollar a day, the number of people living below the poverty line decreased from 29.6 crore in 1981 to 26.7 crore in 2005. In comparison, China achieved a much faster rate of poverty reduction.

The study revealed that in the developing world outside China, the $ 1.25 poverty rate fell from 40 per cent to 29 per cent over the 1981-2005. However, given the growth of population, this progress was not enough to bring down the total number of poor outside China, which stayed at about 1.2 billion.

As for South Asia, the $1.25 poverty rate declined from 60 per cent to 40 per cent over the same period but that was not enough to bring down the total number of poor people in the region, which stood at about 600 million in 2005.

In India, even as the poverty rate (at $1.25 a day) as a share of the total population went down from 60 per cent in 1981 to 42 per cent in 2005, the absolute numbers went up from 420 million to 455 million in 2005 during the period.

The Bank has prescribed that for achieving a higher rate of poverty reduction, India will have to address inequalities that currently impede the poor from reaping the benefits of growth. At the same time, the update noted that the high rate of economic growth witnessed in recent years did help in reducing the incidence of poverty.

On a positive note, the World Bank update pointed out that although the developing world is poorer than expected as per the new estimates, the countries in this group, nevertheless, have been fighting poverty successfully. At this rate, it said the world was likely to reach the first millennium development goal of halving the 1990 level of poverty by 2015.

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