Decades after independence, India sees real gains in poverty reduction

Two centuries of alien rule had ensured that a once prosperous country had been robbed of all its wealth and reduced to an impoverished entity. The British bled India dry of resources to feed England's ravenous machines of the Industrial Revolution, and when they finally departed, India was left with a majority of its population below the poverty line and a fragile economy that placed it in the "developing" nations bracket.

Little wonder that the 'Garibi Hatao' slogan had been in the dialogue of our leaders ever since Independence. Of late, a steadily growing economy has roused hopes that India might, in the course of another couple of decades, be able to shed the developing tag and proudly present itself as a "developed nation" to the international community.

The latest report on the Indian economy by the World Bank has served to fuel this nascent optimism that India might successfully attain this Garibi Hatao objective.

According to the report, India's extreme poverty rate declined sharply to 5.3 per cent over a decade from 27.1 per cent in 2011-12. Such a decrease has become evident despite the World Bank having revised upward, from Rs 184 ($2.15) to Rs 257 ($3), its threshold poverty line, the switch required because of the change in rupee value. Also, as against 34 crore people below the poverty line in 2011-12, the numbers dropped to 7.5 crore in 2022-23.

One needs to note that a revised extreme poverty line of Rs 257 ($3) constitutes a 15 per cent higher threshold and, therefore, should have resulted in a higher percentage of BPL individuals as well as their number. It speaks volumes for India's planning strategy that the numbers have instead come down, with measures such as free or subsidised food transfers supporting poverty reduction, as well as contributing to narrowing the rural-urban poverty gap.

With regard to the economy, the report said, the real GDP of India was around 5 per cent below the pre-pandemic trend level, but growth should gradually converge back to potential over 2027-28, assuming the current global uncertainties are resolved.

There is no gainsaying the possibility that the roused hopes spelled out by the World Bank report might be dampened by the trade war being unleashed by the US President, with elevated trade tensions lowering the demand for India's exports, thereby further delaying the recovery in investment. However, it must simultaneously be noted that at the moment India has entered into trade agreements, or negotiating such agreements, with a number of countries and these might serve to lessen the impact of any possible enhancement of tariff levels by the US.

In the coming months, India has to play its cards right, including with a nation like China, so that the economy is shielded from global tensions and continues its hope-inducing improvement.