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New Delhi: A study by the World Bank has concluded that nearly 80% of people who slipped into poverty in 2020 due to the COVID-19 pandemic hailed from India. Out of 7 crore people globally who became poor that year due to economic losses caused by the pandemic, Indians accounted for 5.6 crore.
Globally, extreme poverty levels went up to 9.3% in 2020 compared to 8.4% in 2019, halting the progress made by poverty alleviation programmes worldwide for the first time in decades. In absolute numbers, 7 crore people were additionally pushed into extreme poverty by the end of 2020, increasing the global total of poor to over and above 70 crore.
“The COVID-19 pandemic dealt the biggest setback to global poverty in decades,” the World Bank’s Poverty and Shared Prosperity 2022: Correcting the Course report declared.
Given that India contributes significantly to global poverty levels due to the sheer size of its population, the World Bank flagged that the lack of official data on poverty from India had become a hindrance in drawing up global estimates. Since 2011, the Indian government has stopped publishing data on poverty.
It noted that due to the lack of official data, the World Bank had relied upon the findings of the Centre for Monitoring Indian Economy’s (CMIE’s) Consumer Pyramids Household Survey (CPHS).
Although the findings by the private data firm are yet to be finalised, the World Bank said it had used it for estimating Indian, regional and global poverty levels due to the want of official data. The CPHS data for 2020 noted that 5.6 crore Indians slipped into poverty in 2020.
The report said the World Bank chose to use CHPS data for India over its own paper – published in April 2022 and estimated that 2.3 crore Indians additionally slipped into poverty in 2020 – because poverty in India was “significantly higher” than its own estimates.
The confusion over the data emerging from India, as enunciated by the World Bank report, has once again brought to the fore collective frustration and concern articulated by economists and statisticians in the country and the world over for some time now over Narendra Modi’s government reluctance to release official data, adversely affecting developmental interventions.
The most recent official data on poverty in India dates back to 2011-12 by the National Sample Survey Office of India.
The World Bank report, however, noted that depending upon the method of estimating the number of poor in India rose anywhere between 2.3 crore and 5.6 crore in 2020. “A national accounts-based projection implies an increase of 23 million, whereas initial estimates using the data described in box O.2 [relating to CMIE data] suggest an increase of 56 million — this latter number is used for the global estimate,” the report stressed.
“Because of India’s size, the lack of recent survey data for the country significantly affects the measurement of global poverty, as was evident in Poverty and Shared Prosperity 2020,” the report said.
The World Bank, however, observed that overall poverty in India was on a downward slide – largely due to a reduction in poverty in rural areas – between 2011 and 2020 when the pandemic hit. “Even though overall poverty has declined, it is by less than what earlier estimates used for global poverty measurement would suggest,” the report noted, referring to the 2011-20 period.
Across the world, poverty levels had shown a downward trajectory until the pandemic hit in 2020. The pandemic, however, resulted in a “historically large addition to poverty levels globally”, according to the World Bank report.
Consequently, an additional 70 million people were pushed into extreme poverty by the end of 2020 – taking the extreme poverty levels globally from 8.4% in 2019 to 9.4% by the end of 2020.
“2020 marked a historic turning point – an era of global income convergence gave way to global divergence. The world’s poorest people bore the steepest costs of the pandemic. Incomes in the poorest countries fell much more than incomes in rich countries. As a result, the income losses of the world’s poorest were twice as high as the world’s richest, and global inequality rose for the first time in decades,” the report observed.
It further noted that rising food and energy prices – exacerbated by climate change and ongoing conflict between Russia and Ukraine – have “hindered a swift recovery” even after the world limped back to normalcy in the aftermath of the COVID-19 pandemic.
Coming up with a bleak forecast for the world, the report said, “The world is unlikely to meet the goal of ending extreme poverty by 2030 absent history-defying rates of economic growth over the remainder of this decade.”
Way forward for a better world
The report offers three key priority actions for fiscal policy in the coming years, as the world tries to “course correct”. One, reorienting spending away from subsidies towards support targeted to the poor and vulnerable. Two, increasing public investment to support long-run development. Three, mobilising public revenue without hurting the poor.
However, mindful of the situation on the ground, the report adds a caveat, “Reforming fiscal policy will be an essential element of correcting course, but we must be realistic about how much we can expect it to do. Despite the promise of fiscal reforms, simulations suggest it will take heroic efforts toward more effective fiscal policy choices to restore the pandemic-related losses in the next four to five years. Successful fiscal reform will require the support of sufficiently powerful domestic coalitions interested in pursuing these types of policy goals, as well as stepped-up global cooperation.”