Sunday, April 10, 2011

Where is Poverty in India?

In the last few months, there has been an ongoing debate across India to figure out who is poor, where are these poor, how many poor people are in India, so on and so forth. Everyone has joined this band wagon and have been trying to suggest a different way of measuring it and trying to push the numbers as much as possible. We have a wide range of poverty figures varying from 26% to 80% of population. Well, the good news is that our population growth has slowed down substantially. So at least our poverty numbers won’t increase any more.

It is in everyone’s interest to prove that India is very poor and a large part of our population goes hungry and without housing or water. If we are not so poor, how will we ask for aid from World Bank or ADB or IFC or USA and UK. If we are doing fine, how will NGOs demand higher and higher funding from foreign donors and foundations/agencies. How will our politicians justify allocating huge funds to social sector and developmental work and schemes like MGNREGA etc where the politicians and abureaucrats, clerks, govt officials, contractors and others get to siphon off thousands of crores of rupees into their own pockets.

Let us look at some facts. There are 60 crore active mobile phone numbers in India. And another 24 crore new people sign up for mobile phone numbers every year. So at least 50% of Indian population has phone and in next three years, 100% of Indians will have a mobile phone. How can a household that has a mobile phone, be poor? So, at least 50% of India is not poor. We have 9.4 crores vehicles in India and another 1.5 crore vehicles (cars, trucks, buses, 3 wheelers, 2 wheelers) are being sold in India every year. This does not include about 20 lakh vehicles that are exported from India every year. Now, each vehicle owner or the driver of that vehicle cannot be poor, right? We have 24.2 crore households in India. So again by vehicle statistics also, at least 50% of India is not poor. Out of these 24.2 crore households, 3.1 crore are DTH and 10.9 crore are C&S based TV households. Only 41.32% of 10 crore households do not own a TV. But this is changing fast @ of 1.3 crore new households getting TV every year. So the skeptics who proclaim and shout that more than 50% of India, are completely wrong. Above is a testimony to the fact that poverty in India cannot be more than 40% on the highest end.

I have been touring across India for last few years. I have visited villages of less than 50 people and those with 500 households. I have visited rural Bihar, Uttarakhand, HP, Rajasthan, Karnataka, Goa and other places. Everywhere I go, I try to meet local people and visit their houses. I notice that they have a bulb or a tube light or both. They have bed and cotton mattress or cooking gas cylinder and appliances like mixer, television, refrigerator and so on. Then I wonder even if they received those things in-kind from their employer or picked up from side of roard, to run or use these consumer items, one would need to pay and if they can afford to pay for gas or electricity or water, are they really poor?

In Aug 2010,, the National Council of Applied Economic Research (NCAER) estimated in its report, "How India Earns, Spends and Saves", that for the first time ever, the number of high-income households in India has exceeded the number of low-income. In 2010, there were 4.67 crore high-income (earning more than Rs 1.8 lakh per annum) households, there were 14.07 crore middle-income (earning between Rs 45,000 and Rs 1.8 lakh per annum) households, and 4.1 crore households counted as low-incomes (earning less than Rs. 45,000 per annum). NCAER, in the report also estimated the number of families having income between Rs 2 lakh and Rs 10 lakh per annum, which is close to the World Bank definition of middle class, at 28.4 million in 2009-10.

What I am debating is that absolute poverty is almost non-existent in India. May be at 5%. You will say 5% of India is 6 crores. Yes, it is but whatever we do, nature won’t let us lower our absolute poverty levels below 5%. Our only option to reduce absolute poverty numbers is to reduce population.

Relative poverty exists in India. But how much? I doubt if it is more than another 10% on top of the 5% absolute poverty. I am poor than my boss who is poor than Vijay Mallya who is poor than Anil Aggarwal who is poor than Bill Gates and my employee is poor than me and his maid is poor than him. But all of these people are not the relative poor we want to help or bring out of poverty. We are talking of people whom you look at or talk to or whose house you visit and you don’t have to use any parameter or get into a debate in any way as to whether they are poor or not. Those people for whom no one will question that they are poor, irrespective of what parameter or methodology you use.

Take a sample of 1,000 people in every metro, sub-metro, city, town and village and then do a subjective market research and analysis of this sort and you will realize that overall poverty levels in India are no more than 15% i.e. 18 crore Indians. Yes, it is still a very large number of poor people but what we need to pat our backs for, is that we brought out most of India from poverty in last couple decades and trickle down affect did work. Now, we have to set our sights on helping these 18 crore Indian to come out of poverty and bring down our poverty levels to around 8% by 2020, below which we will never get, as that’s what law of nature is.

Surya Prakash Loonker is COO of Catalyst – Social Development Consultants Pvt Ltd and lives in New Delhi. For further articles, please see his blog and for more details, please visit or write to him at

1 comment:

Vivek said...

Interesting article. But I don't really agree with the views or logics presented in the article.
Before giving my counter view, I think we should try to define poverty. In my view at a basic level a person unable to afford water, nutrition and shelter "due to lack of resources" can be defined as poor.
You have spoken about the 60+24 Cr. mobile numbers in India, but have you done any analysis on the number of unique customers. You would be surprised to know the number of redundant mobile SIM's or customers having multiple SIM's. No wonder the sales of dual-SIM or multi-SIM mobile phones is going up.
Same is the case with cars, it's mostly the super rich who afford multiple cars.
India is still a country where we have high infant mortality rates, malnutrition deaths etc.
If you have visited the rural area's or even visited the slums you would have seen the despicable conditions in which people live.
I have visited villages where all villagers drink slimy green water, for nutrition they have rice & water, do you intend to tell me that these people are not poor.