Why in News?

• According to a new paper authored by former Niti Aayog Vice Chairman (Arvind Panagariya), rural poverty as a percentage of total rural population declined continuously every quarter beginning July-September 2020.
• Based on household expenditures reported in the Periodic Labour Force Survey (PLFS 2020-21), this estimate contradicts widespread claims showing a large rise in poverty in both rural and urban India post the Covid-19 pandemic.

What’s in Today’s Article?

• The Poverty Estimation in India (Meaning, need, approaches)
• Key Highlights of the Paper - ‘Poverty and Inequality in India: Before and After Covid-19’

The Poverty Estimation in India:

• Meaning of poverty: Poverty can be defined as a condition in which an individual or household lacks the financial resources to afford a basic minimum standard of living.
• Need for poverty estimation:
  • Poverty elimination has remained a major challenge and lies at the core of India's national development agenda to create a just and equitable society.
  • Reliable estimation of poverty is the first step towards eradication of poverty as a basic input for design, implementation and monitoring of anti-poverty programmes.
• Approaches of poverty estimation:
  • The conventional approach is to specify a minimum expenditure/income (poverty line) required to purchase a basket of goods and services necessary to satisfy basic human needs.
  • Estimation of poverty in India has been based on two critical components:
    • Information on the consumption expenditures and its distribution across households is provided by the NSS consumption expenditure surveys;
    • These expenditures by households are evaluated with reference to a given poverty line.
  • In India, the official poverty definition and numbers are estimated based on the Consumption Expenditure Survey (CES) conducted by the National Statistical Office (NSO).
    • The last published data of CES is available for 2011-12, while the government had junked the CES conducted in 2017-18.
  • 

 Key Highlights of the Paper - ‘Poverty and Inequality in India: Before and After Covid-19’:

• Poverty in rural India:
  • It is only during the strict lockdown period (April-June 2020) that rural poverty saw a modest rise.
  • It fell for the full year 2019-20, at a significantly lower rate and witnessed a sharp decline in 2020-21 as in the pre-Covid year of 2018-19.
  • These results are consistent with the robust performance of agriculture (in 2019-20 and 2020-21), significant expansion of NREGA and free distribution of 5 kg food grain per person per month under the Food Security Act.
• Poverty in urban India:
  • It saw a modest rise on an annual basis in 2020-21 and started to decline by April-June 2021.
  • The rise in urban poverty for four quarters beginning April-June 2020 was consistent with the large decline in the production of contact-intensive industries.
  • The free distribution of additional 5 kg food grain helped arrest a sharper rise in urban poverty.
• Why does the paper's findings (reduction in poverty and inequality) differ from earlier findings (showing increase)?
  • This is mainly due to differences in sample design between the Current Employment Statistics (CES 2011-12) and PLFS (2017-18).
  • This makes poverty estimates derived from the two sources entirely non-comparable.