The poverty challenge

High, sustainable, and inclusive growth is the only answer

The release of the United Nations Development Programme’s (UNDP’s) annual report on multi-dimensional poverty is an appropriate point to evaluate India’s progress on poverty reduction. As the report underlines, it is an impressive achievement. The UNDP had previously found that India had lifted 271 million people out of poverty between 2005-06 and 2015-16. The latest, the 2019 report, further fleshed out how this was achieved. Multi-dimensional indicators recognise that poverty is about more than just access to income: It is also about access to resources and capabilities to improve individual prospects. Thus, 10 indicators go into constructing the multi-dimensional poverty index, including nutrition; schooling; access to fuel, power, and drinking water; sanitation; electricity; housing; and child mortality. What is impressive about India’s performance in the decade to 2015-16 is not just the scale of the achievement but also how all-encompassing it was. For one, India was one of the few countries to show a significant decrease on all the 10 indicators. In addition, the report says that “poverty reduction in rural areas outpaced that in urban areas — demonstrating pro-poor development”. It added that “India demonstrates the clearest pro-poor pattern at the sub national level: the poorest regions reduced multidimensional poverty the fastest”. India also saw that the poorest 40 per cent of the population had the greatest relative improvement in their multi-dimensional capabilities — measured both in terms of size, intensity and inclusiveness, India’s poverty reduction effort stands out in global terms.

It is worth noting, however, how much more remains to be done — both in terms of number and inclusiveness, and specific capabilities. There are still more multi-dimensionally poor people in India than anywhere else. The report also points out some problems that are particularly intense in South Asia — for example, child malnutrition. Over 40 per cent of South Asian children aged less than five are stunted or underweight. Worse, it appears that there are disparities within households — almost a quarter of South Asian children live in houses where at least one child is malnourished and one is not. The report is silent as to the gender composition of this problem, but other work has drawn attention to the issue of boys being better fed than girls in India. Last year’s report had also highlighted that poverty is very unevenly spread across identities; Muslims and Scheduled Tribes are the poorest groups, with about half of the former stuck in multi-dimensional poverty. Social as well as economic inclusiveness in poverty reduction must clearly continue to be priority.

The specifics of India’s progress on capabilities can also guide policy. In the 10 years after 2005-06 — eight years of the UPA, and two years of the NDA — progress was most visible on gaining access to productive assets, housing, cooking fuel, and sanitation. Progress on drinking water existed, but was insufficient — and there was barely any improvement in child mortality. Health and water access are the next frontier for poverty reduction. 

Finally, it should be noted that poverty reduction is fastest when growth is high and sustainable. The aim of high, sustainable, and inclusive growth should always be kept in mind.