Post-Pandemic, Poverty Declined In India For Consecutive Quarters: New Study

A new paper by former NITI Aayog vice-chairman Arvind Panagariya and Vishal More has refuted the claim that poverty in both rural and urban India has increased significantly due to the pandemic.

More is the founder of New Delhi-based research and consulting organisation Intelink Advisors.

The study finds that rural poverty, as a percentage of total rural population, decreased every quarter from July-September 2020, contradicting widespread notions of a major rise in poverty.

The authors suggest that poverty reduction policies already in place may have contributed to this trend.

Rural poverty experienced a slight increase only during the strict lockdown period of April-June 2020, as per the paper.

However, it decreased during the entire year of 2019-20, albeit at a reduced pace. The report revealed that rural poverty saw a significant decline in 2020-21, similar to the pre-Covid year of 2018-19.

The paper titled ‘Poverty and Inequality in India: Before and After Covid-19’ noted that the results align with the strong performance of agriculture in 2019-20 and 2020-21, substantial growth of NREGA, and the issuance of 5 kg of food grain every month to each individual, in addition to the supply of the same amount at heavily discounted rates under the Food Security Act.

Meanwhile, Urban poverty in India experienced a slight annual increase in 2020-21, but began to decline by the April-June 2021 quarter.

Despite a four-quarter increase beginning with the strict lockdown period of April-June 2020, urban poverty only modestly rose on a quarterly basis. However, by the April-June 2021 quarter, the decline of urban poverty had recommenced, according to the paper.

Urban poverty rose in four consecutive quarters starting from April-June 2020, due to a significant drop in the production of contact-intensive industries.

However, the distribution of an extra 5 kg food grain prevented a more severe spike in urban poverty, according to the paper.

Panagariya and More utilised data on household expenditures from the Periodic Labour Force Survey conducted by the National Statistical Office for a presentation at the 3rd Columbia Summit on Indian Economy at Columbia University in March 2023.

The National Statistical Office (NSO) estimates official poverty numbers in India through the Consumption Expenditure Survey (CES). The latest data available for CES is from 2011-12 as the government discarded the 2017-18 survey.

Panagariya pointed out that the poverty estimates derived from the CES and PLFS are non-comparable due to differences in sample design. Therefore, he rejected claims of an increase in poverty in 2017-18 and later that are based on a comparison of these estimates from different sources.

According to data presented in the paper, rural poverty increased to 36.4 per cent (of the total rural population) in April-June 2020 as compared to 34.9 per cent in the same period in the previous year.

The level of poverty was also higher than the 33.5 per cent recorded in January-March 2020. However, the situation seemed to improve from July-September 2020, with poverty rates declining to 26.1 per cent in April-June 2021.

As per the data available in the paper, urban poverty increased to 20.2 per cent of the total urban population during April-June 2020 from 19 per cent during the same period in the previous year.

The data further reveals that urban poverty remained high during the following three quarters, with rates of 21.9 per cent, 20.4 per cent and 21.5 per cent respectively, compared to the same periods in the previous year.

However, there was a slight decrease during April-June 2021, with urban poverty dropping to 19.7 per cent.

Data was not available for the following quarters after April-June 2021.

According to the paper, nationwide poverty in India witnessed an increase only during April-June 2020. It rose to 31.7 per cent of the country's population during this period, compared to 30 per cent a year ago and 28.2 per cent in the preceding quarter. However, things improved from July-September 2020, with a decline in poverty rate to 24.3 per cent in April-June 2021.

Despite the impact of Covid-19 Delta wave in the first quarter of FY 2021-22, the paper reports a decline in urban poverty from April-June 2021.