New Delhi: Efforts at the grassroots by governments and leaders pay rich dividends in easing poverty, says a World Bank survey of four Indian states.
In 300 villages of Assam, Andhra Pradesh, Uttar Pradesh and West Bengal, more than 27% of households rose out of poverty during 1995-2005, and the most important role in their mobility was played by empowerment and aspirations of the poor, who suffered due to their low placing in the caste, class and political hierarchy, the study says.
The study also found that the official poverty line of earnings under Rs12 a day for rural India underestimated poverty. Most people surveyed found the state-defined poverty line to be low. “With such a poor income, a person would die of starvation,” they said.
Driving force: Workers at Dharavi — Asia’s largest slum — in Mumbai. The survey said almost 53% — of both the chronically poor and those who have never been poor — cited own initiative as the reason for getting richer. (Abhijit Bhatlekar / Mint)
Arjun Sengupta, chairman of the National Commission for Enterprises in the Unorganised Sector, agreed. “The poverty line should be raised to at least Rs20 a day,” he said, “which would correspond to $2 in terms of the purchasing power of the two exchange rates in the respective countries.”
“Poor people—and that includes the poorest—don’t lack initiative or entrepreneurship,” says study director Deepa Narayan, senior adviser with the Bank in Washington. “What they lack is advice, capital and skills related to markets. They also often find the markets rigged. There is no formal private sector role in eliminating poverty, which is a serious lacuna.”
Almost 53%—of both the chronically poor and those who have never been poor—cited own initiative as the reason for getting richer, says the study. But the people who successfully moved out were more empowered 10 years ago.
The survey is part of a 15-country study by the World Bank to learn retrospectively from people who have moved out, and stayed out, of poverty. “Over 30,000 individuals in India were interviewed. We did not attempt to define poverty but looked at it from the perspective of the people to get the contours of a bottom-up approach,” says Narayan.
The findings are important for policymakers since despite a 6%-plus growth in the gross domestic product in the past 18 years, India’s record in lessening poverty remains modest.
Despite policy liberalization that greatly expanded choices for consumers and raised average income per person, the number of poorest rural Indians, earning only Rs12 a day, dropped slowly from 36% in 1993-94 to 27.5% in 2004-05.
Part of the reason for the slow pace is also because average poverty figures hide the difference between the number of people moving up and those getting sucked into poverty, the reasons for which can be entirely different, the study says.
For instance, in West Bengal, while almost 19% of the households moved out of poverty, a concept that was defined by the community surveyed, a huge 7.7% also became poorer, in effect minimising the net gain to 11%.
Though the reasons for falling into poverty were similar in all the states, such as major illnesses or death, property division, and big-ticket expenditures (such as weddings and other social occasions) leading to debt spirals, there were enough local variations.
For instance, poor people coped with monetary disasters better in Andhra Pradesh, where there is a strong presence of self-help groups, which bailed them out with loans on easier terms. On the other hand, in Uttar Pradesh, marriage and dowry expenses pushed families with several marriageable daughters into poverty, says the study.
“Local democracy,” Narayan says, “is currently functioning more as a private good.” In Uttar Pradesh, caste and social identity mattered in mobility, while in West Bengal, proximity to local government and party representatives helped. In conflict-ridden Assam, people’s access to local governments was poor.