The security web of free foodgrains cushioned Covid’s financial shock, offering insurance coverage to the poor and stopping any sharp enhance in excessive poverty ranges throughout pandemic yr 2020, in line with a working paper of the International Monetary Fund.
The paper is authored by Surjit Bhalla, Executive Director, IMF for India, Bangladesh, Bhutan and Sri Lanka and former part-time member of Prime Minister’s Economic Advisory Council; New York-based economist Karan Bhasin; and Arvind Virmani, former Chief Economic Adviser to the Government of India.
“Extreme poverty was as low as 0.8 per cent in the pre-pandemic year 2019, and food transfers were instrumental in ensuring that it remained at that low level in the pandemic year 2020,” the paper mentioned.
Extreme poverty was outlined by World Bank as share of individuals dwelling beneath $1.9 on daily basis as per 2011 buying energy parity phrases, it mentioned. “The low level of extreme poverty– around 0.8 % in both 2019 (0.76 %) and 2020 (0.86 %) – is suggestive of the need for the official poverty line to now be PPP $3.2,” it added.
The Pradhan Mantri Garib Kalyan Anna Yojana was launched in March 2020 and final month, the Union Cabinet prolonged the scheme until September 2022.
Under the PMGKAY, the Center supplies 5 kg meals grains per 30 days totally free. The extra free grain is over and above the conventional quota offered beneath the National Food Security Act (NFSA) at a subsidised fee of Rs 2-3 per kilogram.
The paper flagged the impact of subsidy changes on inequality. “Real inequality, as measured by the Gini coefficient, has declined to close its lowest stage reached within the final forty years — it was 0.284 in 1993-94 and in 2020-21 it reached 0.292…Possibly the extra stunning consequence from the incorporation of meals subsidies into the calculation of poverty is that excessive poverty has stayed beneath (or equal to) 1 per cent for the final three years.”
Note of warning
Economists warning in opposition to utilizing one worldwide poverty line throughout rural and concrete areas the place costs diverge.
However, some economists sound a word of warning. “To use that poverty line, what you want is earnings distribution as a result of $1.9 is earnings. Officially, we don’t produce earnings distribution knowledge, we’ve expenditure knowledge. The distribution of earnings and the distribution of expenditure are by no means the identical,” mentioned Pronab Sen, former Chief Statistician of India mentioned.
Sen added that often a nationwide poverty line is constructed utilizing state-level poverty and costs knowledge. “Using an international poverty line has its own problems. The reason being that you have the same metric $1.9 PPP for all parts of the country and both rural and urban. We know in India that if you go statewise, the price difference can be as much as 30 per cent between the high cost states and lower cost states and between rural and urban, it’s even larger.”
The paper famous that the PPP $1.9 poverty line is now not acceptable for India. “Nevertheless, it’s accepted as the acute poverty line around the globe and used as a reference customary for claims concerning the elimination of maximum poverty. By this customary, India can moderately declare that in pre-pandemic India was on the verge of eliminating excessive poverty,” it mentioned.
It additionally mentioned that as early as 2016-17, excessive poverty had reached a low 2 per cent stage. “According to the more appropriate but 68 per cent higher Low Middle Income (LMI) poverty line of PPP (purchasing power parity) $3.2 a day, poverty in India registered 14.8 per cent in the pre-pandemic year 2019-20,” the paper famous.
India doesn’t have the most recent up to date consumption expenditure knowledge. The Ministry of Statistics and Program Implementation had in 2019 cited “data quality issues” and determined in opposition to releasing the findings of the Consumer Expenditure Survey outcomes of 2017-18.
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With inputs from TheIndianEXPRESS
