Posts tagged ‘Poverty threshold’


India’s Poor Are More Upwardly Mobile Than You Think – India Real Time – WSJ

Despite India’s reputation as a country where millions of families are stuck in grinding poverty, a new World Bank report shows that a surpassingly large portion of the South Asian nation’s poor population has been finding its way out of poverty.

The report titled “Addressing Inequality in South Asia,”– which looked at the gaps between the haves and have-nots in India and its neighbors– looked at different income groups and how they changed over the five year period up to March 31, 2010.

Over that period close to 40% of the people that had been classified as poor had clawed their way above the poverty line. Of course, the income mobility went both ways, but was not as bad on the down side. Around 15% of the people that had been previously classified as middle class or just above the poverty line fell into poverty over the five years.

via India’s Poor Are More Upwardly Mobile Than You Think – India Real Time – WSJ.


* India’s path from poverty to empowerment | McKinsey & Company

India has made encouraging progress by halving its official poverty rate, from 45 percent of the population in 1994 to 22 percent in 2012. This is an achievement to be celebrated—yet it also gives the nation an opportunity to set higher aspirations. While the official poverty line counts only those living in the most abject conditions, even a cursory scan of India’s human-development indicators suggests more widespread deprivation. Above and beyond the goal of eradicating extreme poverty, India can address these issues and create a new national vision for helping more than half a billion people attain a more economically empowered life.

MGI senior fellow Anu Madgavkar and McKinsey director Rajat Gupta discuss India’s prospects for raising living standards and ending extreme poverty.

To realize this vision, policy makers need a more comprehensive benchmark to measure gaps that must be closed and inform the allocation of resources. To this end, the McKinsey Global Institute (MGI) has created the Empowerment Line, an analytical framework that determines the level of consumption required to fulfill eight basic needs—food, energy, housing, drinking water, sanitation, health care, education, and social security—at a level sufficient to achieve a decent standard of living rather than bare subsistence.

In applying this metric to India, we found that in 2012, 56 percent of the population lacked the means to meet essential needs. By this measure, some 680 million Indians experienced deprivation, more than 2.5 times the population of 270 million below the official poverty line. Hundreds of millions have exited extreme poverty but continue to struggle for a modicum of dignity, comfort, and security. The Empowerment Gap, or the additional consumption required to bring these 680 million people to the level of the Empowerment Line, is seven times higher than the cost of eliminating poverty as defined by the official poverty line (exhibit).

via India’s path from poverty to empowerment | McKinsey & Company.

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A New Way to Measure Poverty in India – India Real Time – WSJ

How should you measure poverty?

It is a question that has generated enormous controversy in India. The country’s government says that since the mid-1990s, the number of people living below the official poverty line has dropped by more than half, hitting 270 million, or 22% of the population, in 2012.

Still, India continues to rank extremely low in United Nations’ measures of well-being. India ranked 136 out of 186 countries in the 2012 U.N. Human Development Index and 94 out 119 in the U.N. World Food Programme’s Global Hunger Index.

The Indian government sets its official poverty line at 816 rupees per person per month in rural areas and 1,000 rupees per person per month for city dwellers. That works out to about 40 cents a day in the countryside and 50 cents a day in the city.

A new study by the McKinsey Global Institute – the research arm of consulting company McKinsey – says that such a gauge of extreme poverty has its place. But it argues India should focus instead on a more comprehensive measure of what it would take to satisfy a person’s basic needs for food, energy, housing, drinking water, sanitation, healthcare, schooling and social security.

McKinsey calls its new measure an “empowerment line.” It is the level where the report’s authors conclude that India’s citizens can get out of poverty and have the resources to build better lives for themselves, rather than scrape along at subsistence levels. McKinsey set its empowerment line at 1,336 rupees a month – roughly 50% above the government poverty line.

“It’s an expanded definition of poverty and aims to calculate the escape velocity needed to get people sustainably out of poverty,” said Anu Madgavkar, a senior fellow at the institute in Mumbai.

According to McKinsey’s calculations, about 680 million people, or 56% of Indians, now live below the empowerment line. Insufficient and ineffective public programs, poor agricultural productivity and a lack of better jobs all conspire to keep people poor.

via A New Way to Measure Poverty in India – India Real Time – WSJ.

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