Poverty in India

India is the fastest growing large economy in the world today. Despite this, one in every five Indians is poor.

• As many as 41.5 crore people exited poverty in India during the 15-year period between 2005-06 and 2019-21, out of which two-thirds exited in the first 10 years, and one-third in the next five years, according to the global Multidimensional Poverty Index (MPI).
• Indian poverty using the new poverty line of $2.15 per day, 10 per cent of Indians were poor in 2019, down from 22.5 per cent in 2011.

Causes of Poverty

• Less Consumption because of economic problem

• Average real rural incomes consumption declined by 8.8 % and real urban consumption increased by 2 % between 2011-12 and 2017-18
• Inferred nominal average consumption in 2017-18 data was Rs. 1892 per capita per month (PCPM) in rural India and Rs. 3739 per capita per month in urban India - lowest in Indian history.

• Large Population: India's population has grown consistently throughout time. In the previous 45 years, it has increased at a pace of 2.2% annually, which translates to an average annual population increase of 17 million people.

• Unemployment: The population is growing, which has increased the number of job applicants. To match this need for work, there is not enough expansion in opportunities.

• Lack of Capital: The economy experiences low levels of investment and job creation due to a lack of capital and entrepreneurship.

• Climate Causes: The states of Bihar, UP, MP, Chhattisgarh, Odisha, Jharkhand, etc. are home to most India's poor people. Agriculture in these states suffers significant damage because of natural disasters such cyclones, earthquakes, regular floods, other disasters.

• Poverty trap: Poverty trap is a spiraling mechanism which forces people to remain poor. It is so binding in itself that it doesn't allow the poor people to escape it. 

Impact of Poverty

• Contraction in GDP growth: A rising number of poor can lead to demand shocks in the economy, which will further lead to the contractions in GDP growth.

• Gap between poor and rich: As per the recent Multi-dimensional Poverty Index prepared by Niti Aayog, one in every four people in India was multi-dimensionally poor. 

• Bihar has the highest such proportion (51.91%), followed by Jharkhand (42.16%) and Uttar Pradesh (37.79%).
• The bottom 50% earned Rs 53,610, while the top 10% earned over 20 times more (Rs 11,66,520), the report states.

Government initiatives for poverty

• Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY): The programme aimed to deliver an additional 5 kg of free grains (rice or wheat) to each person covered by the National Food Security Act 2013 in addition to the 5 kg of subsidised foodgrain that was already provided under the Public Distribution System (PDS).

• ‘Pandemic, Poverty, and Inequality: Evidence from India’ says that ‘extreme poverty was maintained below 1% in 2020 due to Pradhan Mantri Garib Kalyan Ann Yojana (PMGKY).
• Inequality in rural areas has been reduced by 'leveling down' - reducing everybody’s income but proportionately more for the richer than the poorer sections of the population.
• Increase in efficiency of food subsidies' distribution via use of AADHAR.

• Nyuntam Aay Yojana (NYAY) : The PM-Kisan has, however, been dwarfed by the promise of the Nyuntam Aay Yojana (NYAY),  which envisages an annual transfer 12 times greater to the poorest 20% households.