Trends in Global Poverty

Why in news?

The World Bank has released a report, titled “Poverty and Shared Prosperity 2022: Correcting Course” that provides latest estimates and trends in global poverty and shared prosperity.

What is the World Bank report about?

Global extreme poverty- Number of people living on less than 2.15 dollars or Rs 177 a day.

• Poverty and Shared Prosperity is a biennial series that explores a central challenge to poverty reduction and boosting shared prosperity.

Global estimates

• Global poverty - The report states that global poverty reduction has been slowing down since 2015 but the Covid pandemic and the war in Ukraine have reversed the outcomes.
• The world is unlikely to meet the goal of ending extreme poverty by 2030.
• According to the World Bank report, global extreme poverty increased to an estimated 9.3% in 2020, up from 8.4% in 2019.
• In other words, the number of global poor increased by 7.1 crore people.
• Global inequality - Global inequality rose for the first time in decades.
• The poorest people bore the steepest costs of the pandemic - income losses averaged 4% for the poorest 40%, double the losses of the wealthiest 20% of the income distribution.
• Global median income- Global median income declined by 4% in 2020 - the first decline since measurements of median income began in 1990.

What about India’s poverty levels?

• Official data- The World Bank flagged that the lack of official data on poverty from India had become a hindrance in drawing up global estimates.
• The most recent official data on poverty in India dates back to 2011-12 by the National Sample Survey Office of India.
• The report uses data from Centre for Monitoring Indian Economy’s (CMIE) Consumer Pyramids Household Survey (CPHS).
• India’s case- According to the World Bank, Indians account for 80% of those who became poor globally in 2020 due to COVID-19.
• The CPHS data for 2020 noted that 5.6 crore Indians slipped into poverty in 2020.
• The World Bank estimated that 2.3 crore Indians additionally slipped into poverty in 2020.
• The World Bank, however, observed that overall poverty in India was on a downward slide, largely due to a reduction in poverty in rural areas between 2011 and 2020.

What are the suggested solutions?

• According to the President of World Bank Group, fiscal policy offers opportunities for policy makers in developing economies to step up the fight against poverty and inequality.
• The World Bank has three specific suggestions when it comes to fiscal policy.
  • Choose targeted cash transfers instead of broad subsidies.
  • Prioritize public spending for long-term growth.
  • Mobilize tax revenues without hurting the poor.

References

1. https://indianexpress.com/article/explained/explained-economics/world-bank-pverty-report-india-inequality-8193048/
2. https://thewire.in/economy/indians-account-for-80-of-those-who-became-poor-globally-in-2020-due-to-covid-19-world-bank