Opinion
Data on what Indians earn does have plenty to reveal of poverty in India
Summary
- While a poverty line needs to be determined for use with fresh data on consumption spending, we have income readings that offer some clarity on the level of deprivation within the country.
Even though the fact-sheet on the Consumption Expenditure Survey (CES) has been officially released, the debate on poverty is far from over. Given that the new CES is based on a completely new survey design, the only way to resolve this issue is to have an expert committee decide on the appropriate poverty line to be used with these CES readings. Until that happens, the debate on poverty is likely to continue.
But that does not mean that we can’t get an idea of the level of poverty. The best alternative is to examine the level of wages or earnings of the poorest group of wage workers. This is not a new idea. In fact, the initial poverty lines were anchored to the minimum wages of casual unskilled manual labourers, since they inhabit the poorest category of households. Further, the methodology of setting minimum wages is linked to a minimum requirement of food and some forms of non-food expenditure.
Minimum wages for unskilled workers in areas with lowest urbanization or rural areas for 2023 was ₹424 per day, as per a government notification. For 2024, it is ₹449 per day. This is lower than the price-adjusted minimum wages of ₹483 in 2022-23, as per the suggestion of the labour ministry expert committee. The updated Rangarajan poverty line for 2022-23 at ₹1,837/ ₹2,603 per month per person for rural/urban areas, respectively, implies a family poverty line of ₹9,185/ ₹13,015, assuming a five-member family. Based on the actual number of days worked in a month from the Periodic Labour Force Survey (PLFS), a wage worker with a family to support would need minimum earnings of ₹390/552 per-day in rural/urban areas to cross the poverty line. For all of India, it would imply a poverty line of ₹445 per day, slightly higher than the government notified minimum wages.
What is the actual level of wages received by casual wage workers? According to labour bureau data, the average wage in agricultural occupations in January 2023 was ₹362 per day. It was higher in non-farm occupations, at ₹412, still lower than minimum wages. Another data source are wages and earnings reported by the PLFS, for which the 2022-23 report is available. According to PLFS readings, casual workers in rural areas received wages of ₹383 in the January-March 2023 quarter. This was only ₹310 per day in case of agricultural workers, lower than the estimate reported by the labour bureau and almost two-thirds of the specified minimum wages.
On average, a casual wage worker is earning less than both the minimum wages and Rangarajan poverty line in 2022-23. We also have estimates from the India Employment Report (IER) 2024. As per the report, brought out by the International Labour Organization and Institute for Human Development, 52% of all casual workers did not receive the minimum wages. 76% of workers in agriculture and 70% in construction got wages lower than minimum wages. It is not just casual wage workers who received wages less than the notified minimum, but also regular workers. The proportion of regular workers whose daily earnings were less than minimum wages was 41%. Together, regular and casual wage workers account for almost half of all workers in 2022-23. And almost 45% of them were earning less than minimum wages. The proportion of workers who earned less than the monthly sum needed to cross the Rangarajan poverty line was a fifth.
The IER also confirms the trend of a steady decline since 2011-12 in real wages of regular workers. While casual wage worker wages based on PLFS increased between 2011-12 and 2022-23, the wage growth rate was half the pace observed between 2004-05 and 2011-12. However, for casual wages, labour bureau data suggests a decline in real non-farm wages, with agricultural wages increasing at less than 1% per year in the last decade.
While these are not precise estimates, the wage and earnings data we have is comprehensive enough to suggest a significant proportion of Indians still live in poverty. A similar calculation for 2011-12 suggests that while poverty may have declined since then, it is only slightly lower.
The issue is not just of estimation of poverty, but a larger one of declining employment quality in India and meagre earnings for the majority of workers, including better-paid regular workers. The claim of India having eliminated extreme poverty may work as political rhetoric, but it may be at the cost of ignoring the stark reality of poorly paid workers and worsening employment quality.
