Pathways to Prosperity: An e-Symposium

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Blog #1: Five key drivers of reducing poverty in India

India is uniquely placed to drive global poverty reduction. The country is home to the largest number of poor people in the world, as well as the largest number of people who have recently escaped poverty. Despite an emerging middle class, many of India’s people are still vulnerable to falling back into poverty.

Over the next few weeks, this series will look back and analyze publicly available data to better understand what has driven poverty reduction from the mid-1990s until 2012, and the potential pathways that can lead to a more prosperous India. Since it is clearly not feasible to elaborate on all the myriad pathways out of poverty available to India, we focus on a few key themes that the diagnostics show to be of particular relevance to the country. We hope this series will contribute to the ongoing discussions on how poverty can be eliminated from India.

We are thankful to the Indian Express for partnering with us in disseminating this series to its readers.

India is home to 26 percent of the global extreme poor. This means that the world’s ability to end extreme poverty by 2030–an objective originally adopted by the World Bank and now a key element of the Sustainable Development Goals–hinges on India’s ability to make strong and sustained inroads in reducing poverty. The good news is that India has made notable strides in tackling extreme poverty and promoting growth among its poorest – what we call shared prosperity.

Following decades of lackluster performance, growth accelerated in the 1980s and picked up steam after economic reforms began in earnest in the early 1990s. After 1991, per capita income grew nearly two-and-a-half times in real terms compared to the preceding three-and-a-half decades - from 1.8 percent per year to 4.3 percent per year.  India is now among the fastest-growing economies in the world.

The country is also home to the largest number of people that have escaped poverty in recent years, based on a poverty line set at $1.90 per person per day (in 2011 Purchasing Power Parity). Indeed, in contrast with the 1990s, the rate of decline in extreme poverty in India not only outpaced the developing world as a whole but also the middle and lower-middle income countries as a group.

With that said, the poverty challenge in India remains broad, and sometimes contradictory. Even though there is an emerging middle class, many people who have escaped poverty are not yet economically secure, living precariously close to the poverty line.  What’s more, when the definition of poverty is expanded beyond what people consume to include other dimensions of well-being, such as access to education, health care and basic infrastructure, poverty has a grip on a much larger share of India’s people. 

And when we compare India to other countries, there is marked room for improvement. For example, even though India has grown rapidly, its growth has been less effective at reducing poverty than in some of India’s middle income peers such as China, Vietnam, Brazil and Turkey. India’s performance on key non-monetary indicators of well-being such as child nutrition and improved sanitation facilities lags behind countries at similar stages of development.  And estimates that look at the country as a whole can often mask very large differences in the standard of living between states.

What lessons do the past two decades offer for what it will take for the country to sustain progress and bring about deeper changes? Some of our recent research highlights five key requirements for sustainable poverty reduction and shared prosperity in India going forward:

  1. Accelerating rural poverty reduction: with four out of every five of India’s poor people living in rural areas, progress will need to focus on the rural poor. Our research shows that it’s not just about agricultural growth, which has long been considered the key driver of poverty reduction. In fact, rural India is not predominantly agricultural and shares many of the economic conditions of smaller urban areas.  Capitalizing on growing connectivity between rural and urban areas, and between the agriculture, industry and services sectors, has been effective in the past two decades and holds promise for the future.
  2. Creating more and better jobs: the road out of poverty in India has been built on the performance of the labor market, but also benefitted from rising transfers and remittances, and favorable demographics among other factors. Labor earnings have risen enough to move people out of poverty, but not into the middle class – more could be done.  Future efforts will need to address job creation in more productive sectors, which has until now been tepid and has yielded few salaried jobs that offer stability and security.
  3. Focusing on women and Scheduled Tribes: two of the most worrying trends are the low participation of women in the labor market and the slow progress among scheduled tribes. India’s women have been withdrawing from the labor force since 2005 and less than one-third of working age women are now in the labor force. As a result, India today ranks last among BRICS countries, and close to the bottom in South Asia in female labor force participation. Scheduled Tribes started with the highest poverty rates of all of India’s social groups, and have progressed more slowly than the rest. Both are at risk of being locked out of India’s growth and prosperity.
  4. Creating more “good” locations: where people live largely shapes their prospects in life. India’s states continue to see large and growing differences in poverty levels and basic opportunities. More and more of India’s poor are concentrated in the poorest states, and even within relatively prosperous states, certain pockets of deprivation persist where people are unable to share in the state’s successes.   
  5. Improving human development outcomes for the poor: this is central to improving their quality of life and income earning opportunities. We cannot continue to assume that rapid economic growth will automatically translate into better human development outcomes. The recent past shows that some problems, such as undernutrition and open defecation, are endemic and not confined to the poor, and have not improved with economic growth.
Future articles in this series will explore these five points in greater detail.

 

Authors

Onno Ruhl

Country Director, World Bank India

Join the Conversation

S.P. kaushik
May 23, 2016

Eyeopening article

shamim Rafique
June 29, 2016

India is the country if it is supposed India has 100 million Population and poverty is 26%, it mean 26 million or Two crore and 60 lac. If Performance is only 1% to get out from poverty line from 26 %, will be only 0.26 million 0r 2 lac 60 thousand and remained Two crore and 57 lac & 40 thousand poor. Like Pakistan Population 20 million Poverty is as in India 26%. Then poor will be 0.52 million or 52 lac. How can we
elaborate this position?

Rajin E Lawrence
May 24, 2016

I would like to participate in all discussions as far as India's poverty is concerned. Presently in Ooty on temp stay, and will go back to Kerala (Trivandrum) for permanent stay. I know the main reason for poverty in this place, being caste system of evil is still at its height. Everything is depending on it and for another 100 years no change. Nobody can change this evil because politicians are taking advantage on this than doing anything good. Maybe I can do something. Rgds. Rajin

Bibhu Padarbinda Das
May 29, 2016

The poverty in India is due to the following few reasons.
It's like we are poor because we are poor. The infrastructure development in rural areas can enhance the scope of capacity building & skill development of people and can be engaged locally to harness the local resources for making substantial contributions to GDP.
Sincerity of political will of the so called politicians must aim at reduction of poverty instead of deviding people to harness & nurse their vested interst.

Angeline Limo
August 03, 2016

I agree with you 100%. Same goes for my country, Kenya. And I am sure DITTO for most of the other poor of so-called middle income countries.

FaiyazMuhammed Pasha
June 21, 2016

The best method to end poverty and all other lacunae is to empower every able man/woman with a permanent, secure job. After 43 years of R & D, We have designed a program which will generate in India in the next 10-12 years 200 million direct and 200 million indirect permanent jobs.
The Program, during the processes and methods, also takes out and stops carbon emissions estimated at about 30 billion Tons. This is the total emissions to-day worldwide. We had sent the program to the World Bank during 2011 under their scheme 'Carbon Partnership Facility' We received a reply from the WB stating that the program is too large and that they would be interested only if the GOI sends the program, not us. And that they would sit with the GOI and chalk out a program and accordingly fund the program. We sent the entire correspondence by courier to the GOI after telephone instructions ; The PMO, the Finance Ministry; the Planning Commission was delivered both electronic and hard copies. All other Ministries were sent copies by Post. The MOEF already was aware of the entire correspondence with the Bank, including the project/program details. none cared to open the papers and study them, forget about any follow up. The Bank also did not care to make a casual enquiry to the GOI in this respect. This, by now, could have turned the climate change scene topsy turvy and instead of the Paris Agreement, there would be a Paris Conclusion on Climate Change.
Again the program could have been later or concurrently applied in every other country after about two years.
Let me recount the program in brief.
1.A India Energy Net with 2.5 million MWs of Clean, Renewable Energy from a biomass to be cultivated on every barren, uncultivated piece of land, including deserts, on roof tops, Road tops, building walls.
2.A India Hydronet which would stop all floods and droughts, ensure every hectare of land as much of water as required and ensure every river flow always with measured, clean & fresh waters.
3.A India Transnet which would set transport free from all problems, bring about Urban dispersion & Rural equalization dispelling Urban decay. A two speeds
4.A India Communication Net ensuring an Internal Security Net and an Econometric Net.
5. Above all, a permanent job to every able bodied man and woman everywhere. Zero Water & Air pollution.

FLAVIO BRAGA ALEMAN
June 24, 2016

La Pobreza no debe existir vivimos en un mundo que nos da vida, alimentos, calor, agua,NO somos pobres somos ricos alguien me puede decir si en el Universo existe otro planeta como la tierra NO? y entonces porque somos pobres?, bueno la pobreza la creo el projimo, el Comerciante, el Explotador las Empresas que vieron a los seres humanos como materia prima de hacer mas riqueza, sin importar la destrucción de selvas, bosques, ríos, mares, NO ME IMPORTA EL MUNDO SOLO YO Y mi EMPRESA, esa es la razon de la pobreza, un problema que le dejan a los Gobiernos, y si estos son complices mas pobreza,FLAVIO

Subash Philip
June 25, 2016

To end poverty, India has to take seriously the The Right to Education Act and implement the provisions of the Act. Schools should be set up in every village. Teachers should be well trained and well paid. Once every citizen is properly educated, every issue we have now which seems insurmountable will simply vanish. If the government cannot do that allow and empower the NGOs to work for that end. Raise the standards of education where it is currently available with emphasis on reading and writing skills. Design education to suit the jobs available in the locality. Genuine education will attract capital and dispel all darkness.

shazia
June 27, 2016

Pakistan being the sister of India have the same issues of poverty and same findings can be used to eradicate the poverty.

Ashok Seth
June 28, 2016

To understand and develop a meaningful strategy/action plan to address poverty in Inida we should analyze the drivers in rural and urban areas separately because their needs and circumstances are quite different with different priorities requiring different approaches/actions. It will then also be easier to understand and exploit synergies through more productive rural-urban linkages. I hope the future articles would give sufficient attention to these differences.

Renee Desclaux
June 28, 2016

So pragmatic and brilliant, Onno! How can leaders be convinced to adhere to such a very constructive path forward? A compelling and actions/results oriented strategy - state by state? - might help them focus on the basics, and achieve noteworthy results...All the best in your endeavors!

Dr Mrs Sushma Joiya Pandit
June 30, 2016

First of all we will have to define " The Poor " and " The Poverty". According to a survey conducted by Integrated Congress of Women Entrepreneurs it has been concluded that a man/ women who do not wish to work is a poor man and those who work are not poor. To eradicate poverty from Rural India we must inculcate the habit and culture to work for earning money. But our political system encourages the poor to remain within the domain of poverty and go on getting SUBSIDIES. FREE ration is being distributed to poor, FREE medical treatment is being provided, Transportation at subsidized rate. FREE Education, FREE Books and on the top of it FREE mid day meal in all Government schools. All these activities imply to generate more poor population, more poor votes to win elections.
We are requesting the Government to omit the word of subsidies from the process of Development to eradicate poverty. We will not succeed in getting it done.
Still we have a challenging plan to eradicate poverty from Rural India provided if and only if the DRDA/ Nabard cooperate with us. POVERTY we only can Eradicate and not the Government.

Angaoat Raghu Menon
June 30, 2016

India is a up coming country where as exploring its sources to the outer side of the world. Indias New ministery is trying to develop the sources and its capabelities to the world. It will take time of 10to20 Years will take. India is a largely Populated country and its poverty line is to be cured slowley only. The development should take from the bottem line of the villages where as the progress is not reached. There are the villages Electrcity and proper acess to reach the villages are there in the Indian continent. First of all we must eradicate the Poverty from the Country is the first thing, reach food for all and the Augriculture sector is to be developed, growing cost of the food is sivire in the Country. But the production cost of the food is too high in India, and food price is low ,so the Farmer wont cultivate the Paddy fields as it is lying idiale. In the Energy sector Nuclear Power plants should be developed as well as Hydro electrycity and the renewable Energy also usable so the Carbon emission should be reduced, and the factory emission should be reduced and the globel climetic control is regulated. In the place of City developments the rural area should be developed and the Job should be regulated the Educated village people. Govt: should have proper planning to put basic on the village to City developments. I am concluding that the India will come out of Povrty with in the Years of 2030.

Janakiraman
July 14, 2016

Very nice article. Good initiative. But the basic question remains same. In India, we don't have clear, simple and honest methodology to assess poverty and define who are poor. We go with very biased, abstract numbers. First lets think and act on defining poverty, have independent data house to assess it and openly declare it. Then lets build on from the data base to address it. Otherwise we talk about a lot on poverty but we remain in the same place and start again from the same place after few years.