Free foodgrain scheme helped in tackling poverty; rich states stay ahead

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By Pradeep Kumar Panda

Bhubaneswar, March 7: In rural areas, the dimensions of poverty are often interlinked. Taking school attendance as an example, 1.9 per cent of people (8.2 million) in urban areas are poor and living with an out-of-school child as compared with 4.8 per cent (46.3 million) in rural areas.

In rural areas, 82.4 per cent of poor people who are deprived in school attendance live in households that are also deprived in housing, and 84.7 per cent live in households that are also deprived in cooking fuel. The corresponding percentages in urban areas are 45.4 per cent and 41.6 per cent.

In both rural and urban areas, nutritional deprivation is rampant, with around 60 per cent of people experiencing it. Schooling programmes such as the midday cooked meals scheme address some interlinked deprivations affecting out-of-school children while also supporting their educational attainment.

One of the key findings of the UNDP Report is that the incidence of multidimensional poverty got reduced the fastest in the poorest states. Bihar, the poorest state in 2015-2016, saw the fastest reduction in its MPI value. The incidence of poverty there fell from 77.4 per cent in 2005-2006 to 52.4 per cent in 2015-2016 and further to 34.7 per cent in 2019-2021.

Across states and union territories, the fastest reduction in the MPI in relative terms was in Goa, followed by Jammu and Kashmir, Andhra Pradesh, Chhattisgarh and Rajasthan. Despite this improvement, in relative terms, the poorest states are still behind the rich states. Of the 10 poorest states in 2015-2016, only one (West Bengal) was not among the 10 poorest in 2019-2021. The rest of the states namely, Bihar, Jharkhand, Meghalaya, Madhya Pradesh, Uttar Pradesh, Assam, Odisha, Chhattisgarh and Rajasthan, remain among the 10 poorest.

The 2020 global MPI report noted that the COVID-19 pandemic could set back the progress in poverty reduction by three to 10 years. The analysis built on microsimulations informed by data on school closures and food security published by the UN agencies in early 2020. Their recent estimates suggest that the most pessimistic scenarios are likely.

Updated data from the United Nations Educational, Scientific and Cultural Organization (UNESCO) show that, on average, students across the globe have lost half a year of schooling due to the pandemic. Even where school attendance has swiftly rebounded, the learning process has still been negatively affected in many cases, and some children never went back to school.

Furthermore, the most recent data on food insecurity from the World Food Programme (WFP) suggest that the number of people living in food crisis increased to 193 million in 2021 as compared to 135 million in 2020. As compared to an MPI value of 0.069 for India, Bangladesh and Pakistan had higher MPI values of 0.104 and 0.198 respectively for the latest period. It was 0.091 for South Asia as a whole.

Multidimensional poverty is compared with income poverty measured by the percentage of the population living below 2011 PPP $1.9 per day. It shows that income poverty only tells a part of the story. The headcount or incidence of multidimensional poverty is 6.1 per cent points lower than the incidence of income poverty. This implies that individuals living below the income poverty line may have access to non-income resources.

The contributions of deprivations in each dimension to the overall poverty provide a comprehensive picture of people living in multidimensional poverty. It may be noted that India has the lowest incidence of population in severe MPI as compared to Bangladesh and Pakistan as also the South Asia region.

Bhalla et al. (2022) have recently provided findings based on some innovations toward the study of poverty in India. They cover the pandemic years of 2020 and 2021, highlighting the critical role of food subsidies in containing extreme poverty in India. These estimates indicate that prior to the pandemic, in 2019, extreme poverty in India, using alternate methods, ranged between 1.4 per cent (official MMRP method, PFCE growth) and 5.4 per cent (outdated uniform recall method, state domestic product growth).

According to the official MMRP method, poverty in the pre-pandemic year of 2019 was just 1.4 per cent, implying a decline of 10.8 per cent points since 2011-12. This indicates that India was close to eliminating extreme poverty prior to the pandemic. Bhalla et al. argue that even this low level of extreme poverty may be an overestimate since it ignores poverty removal because of the transfer of food rations (to now almost two-thirds of the population). In their estimate, extreme poverty was as low as 0.8 per cent in 2019.

Food transfers played an important role in ensuring that extreme poverty remained contained at a low level even in the pandemic year of 2020. Post-food subsidy inequality at 0.294 is now very close to its lowest level of 0.284 observed way back in 1993-94. Data show steady fall in the incidence of extreme poverty with reference to two benchmarks namely, a poverty line of PPP$1.9 and of PPP$3.28.

The fall is steady except for the pandemic years, when there is a slight increase in the incidence of poverty. The blue line indicates the impact of food transfers on reducing the incidence of poverty. Accordingly, with reference to the PPP$1.9 poverty line, extreme poverty fell to below one per cent by 2020. Even with reference to the higher benchmark of PPP$3.2, poverty fell to about 14.8 per cent and 18.1 per cent in 2019 and 2020 respectively after inclusion of food subsidies.

With reference to PPP$3.2 poverty line, there was an increase of 3.3 per cent points as a result of the pandemic. In comparison, with reference to PPP$1.9 poverty line, the increase in the incidence of poverty due to the pandemic was only 0.1 per cent points. This indicates that the food subsidy program was well targeted and had the necessary impact on the lowest income rungs of the society. (To be concluded …)

First in the series was ’23 countries have higher proportion of poor than India’ Link: https://theraisinahills.com/23-countries-have-higher-proportion-of-poor-in-rural-areas-than-india/