TAG: GS 2: SOCIAL JUSTICE
THE CONTEXT: According to a research paper by the National Council of Applied Economic Research (NCAER), poverty in India has seen a substantial decline from 21.2% in 2011-12 to 8.5% in 2022-24.
EXPLANATION:
- This paper, titled “Rethinking Social Safety Nets in a Changing Society,” is authored by Sonalde Desai and utilizes data from the newly completed Wave 3 of the India Human Development Survey (IHDS) alongside data from Waves 1 and 2.
Historical Context and Current Trends
- The decline from 2004-2005 to 2011-12
- The IHDS findings indicate a significant reduction in poverty between 2004-2005 and 2011-12, with the headcount ratio dropping from 38.6% to 21.2%.
- This trend continued in the following decade despite the adverse impacts of the COVID-19 pandemic.
- Continued Decline to 2022-24
- Between 2011-12 and 2022-24, poverty further decreased from 21.2% to 8.5%.
- This sustained reduction highlights India’s progress in improving economic conditions and mitigating poverty, even amid global health crises.
Factors Contributing to Poverty Reduction
- Economic Growth
- Economic growth has played a crucial role in poverty reduction.
- As the economy expands, more opportunities arise, lifting people out of poverty and improving living standards across both rural and urban areas.
- Social Protection Programs
- The paper emphasizes the need for nimble social protection programs that can adapt to the dynamic economic climate.
- Traditional strategies aimed at chronic poverty may no longer be as effective as newer challenges emerge.
- Ensuring that social protection systems evolve with societal changes is essential for equitable development.
Challenges and Future Directions
- Shift from Chronic to Transitory Poverty
- The paper notes a shift in the nature of poverty from long-term, chronic poverty to more transitory forms caused by “accidents of life” such as natural disasters, illnesses, deaths, and changes in occupational opportunities.
- This shift underscores the need for social protection systems that can address these transient yet impactful events.
- Ensuring Inclusivity in Social Safety Nets
- As India progresses towards greater economic prosperity, the challenge lies in ensuring that social safety nets remain inclusive and effective.
- Policymakers must consider how to adapt these programs to continue supporting those in need, especially as traditional poverty determinants become less prevalent.
Government and Institutional Perspectives
- NITI Aayog’s Observations
- Earlier this year, NITI Aayog CEO highlighted that the latest consumer expenditure survey indicates poverty has further declined to around 5%.
- This suggests a growing prosperity in both rural and urban areas.
- The consumption levels of the lowest economic segments are similar to the poverty line adjusted for current prices, indicating minimal poverty presence in the 0-5% group.
- NSSO Data on Household Consumption
- The National Sample Survey Office (NSSO) released data on household consumption expenditure for 2022-23, showing that per capita monthly household expenditure has more than doubled compared to 2011-12.
- This increase in consumption reflects improved economic conditions and higher living standards.
- Poverty Line Adjustments
- The poverty line, as recommended by the Tendulkar Committee Report, was set at Rs 447 for rural areas and Rs 579 for urban areas in 2004-2005.
- These thresholds were later adjusted by the Planning Commission to Rs 860 and Rs 1,000, respectively, for 2011-12.
- Such adjustments are crucial for accurately measuring and addressing poverty in changing economic contexts.
IHDS Wave 1 (2004-05)
- The first round of the IHDS survey was conducted in 2004-05.
- It covered 41,554 households in 1,503 villages and 971 urban neighbourhoods across India.
- The survey collected data on a wide range of topics, including caste, consumption, income, agriculture, education, health, gender relations, and more.
- The goal of IHDS was to document changes in the daily lives of Indian households during a period of rapid social and economic transformation.
IHDS Wave 2 (2011-12)
- The second round of the IHDS survey, known as IHDS-II, was conducted in 2011-12.
- It re-interviewed 42,152 of the original households from the first wave, achieving an 85% re-interview rate.
- The IHDS is a unique panel survey that allows researchers to study changes in the lives of Indian households over time.
- IHDS-II continued to collect data on the same broad range of topics as the first wave.
IHDS Wave 3 (Ongoing)
- IHDS-3 is the third round of the India Human Development Survey, currently under construction with fieldwork beginning in May 2022.
- The expected Wave 3 will sample more than 41,000 households comprising over 200,000 individuals across India.
- IHDS-3 aims to assess changes in individuals’ life courses as well as the impact of economic changes and public policies on household well-being, studying different dimensions of human development like education, health, caste, and gender relations.
- IHDS-3 will be a Computer Assisted Personal Interviewing (CAPI) survey, which is expected to improve data quality through skip patterns, logic checks, and validations.
- IHDS-3 is a collaborative effort between NCAER, the University of Maryland, the University of Michigan, and Indiana University Bloomington.
National Council of Applied Economic Research (NCAER)
- National Council of Applied Economic Research (NCAER) is India’s oldest and largest independent, non-profit, economic policy research think tank.
- Established in New Delhi in 1956, it acquired considerable national and international standing within only a few decades of its founding.
- It is one of a handful of think tanks globally that combine rigorous analysis and policy outreach with deep data collection capabilities, especially for household surveys.
- NCAER’s roots lie in Prime Minister Nehru’s early vision of a newly-independent India needing independent institutions as sounding boards for the government and the private sector.
- Remarkably for its time, NCAER was started in 1956 as a public-private partnership, both catering to and funded by the government and private industry.
- NCAER’s first Governing Body included the entire Cabinet of Economics Ministers and the leading lights of the private sector, including names like C.D. Deshmukh, J.R.D. Tata, John Mathai, and Asoka Mehta.
- The Ford Foundation provided strong financial support in the early years, combined with support from the Finance Ministry and Tata Sons.
