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India has achieved 44% reduction in the percentage of poor people between 2001 and 2011: PEW Survey

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By NewsGram Staff Writer

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Between 2001 and 2011, India has managed to reduce the percentage of people below poverty line by almost a half.

According to the survey conducted by the PEW Research Center, around 35.4% Indians were below poverty line in 2001, which has been reduced to just 19.8% in 2011. That means, a percentage point change of (-15.6) or a reduction of 44% in the percentage of poor people. Indeed, it is a huge leap for the country.

This reduction in poverty can also be seen across the globe as percentage of poor people reduced from 29% in 2001 to 15% in 2011.

In terms of absolute numbers, India’s population grew from 1.028 billion in 2001 to 1.21 billion in 2011. For the same period, the number of poor people reduced from 364 million to around 240 million.

This is a good sign as far as India is concerned. It comes as an affirmation of the success of its poverty alleviation programs.

India has been struggling to overcome poverty right from its Independence days. According to the estimates published by B.S.Minhas, the Indian poverty rate was around 65% during 1956-57. Since Independence, successive governments have implemented various measures to uplift people out of poverty.

Taking note of India’s efforts at poverty reduction, the World Bank’s Global Monitoring Report for 2014-15 had stated that India has been the biggest contributor to poverty reduction between 2008 and 2011, with around 140 million or so lifted out of absolute poverty.

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The PEW survey divided the world population into five categories based on their income levels: Poor, Low income, Middle income, Upper-middle income and High income. It categorized people with per capita daily earning less than $2 under “Poor”. Similarly, people earning between $2.01 and $10 were put under “Low income” and those earning between $10.01 and $20 were put under “Middle income”. The people with per capita income above $20 and up to $50 were put under “Upper-middle income” and those earning above $50 were put in “High income” category.

Therefore, the percentage of Indians earning less than $2 a day now stands at 19.8%. But, this reduction in poverty isn’t getting reflected as increase in the middle-income class. Instead, a large chunk of people have moved to low income category.

Percentage of people in low income category was 62.9% in 2001. It has increased to 76.9% in 2011. That is, a percentage point increase of 14, showing that a majority of poor people have made a transition to low-income level.

The percentage of middle income population rose to 2.6% in 2011, from 1.4% in 2001, showing only a marginal rise of 1.2 percentage point in middle income people. The rise is even lesser in case of upper-middle income and high income population with only a percentage point rise of 0.3 and 0.1 respectively.

The global percentage point change for various categories has been as follows: Poor (-14), Low income (6), Middle income (6), Upper-middle income (2) and High income (1).

Therefore, the trend in India is in line with global trend. Both in India and around the world, there has been a large transition of people from poverty to low income levels. The transition of people into middle income level has been moderate and the transition is only marginal in case of upper-middle income and high income levels.

The Indian government should take the results of this survey into consideration and focus its efforts not only on poverty alleviation programs, but also on ways in which people can increase their income levels.

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How telecom has become driver of economic change in India

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The country's hyper-competitive telecom sector has led the revolution from the front.
The country's hyper-competitive telecom sector has led the revolution from the front. Wikimedia Commons
  • India has done well to stay ahead of the curve in the technological revolution
  • The sectoral change in productivity has been the highest in the telecommunications sector since the reforms of 1991
  • India has managed to provide the cheapest telephony services around the world

For the most part of human history, the change was glacial in pace. It was quite safe to assume that the world at the time of your death would look pretty much similar to the one at the time of your birth. That is no longer the case, and the pace of change seems to be growing exponentially. Futurist Ray Kurzweil put it succinctly when he wrote in 2001: “We won’t experience 100 years of progress in the 21st century – it will be more like 20,000 years of progress (at today’s rate).” Since the time of his writing, a lot has changed, especially with the advent of the internet.

India has done well to stay ahead of the curve in the technological revolution. The country’s hyper-competitive telecom sector has led the revolution from the front. In fact, according to Reserve Bank of India data, the sectoral change in productivity has been the highest in the telecommunications sector since the reforms of 1991, growing by over 10 percent. On the other hand, no other sector has had a productivity growth of above five percent during the same period. It is no wonder that it has also been one of the fastest-growing sectors of the Indian economy, growing at over seven percent in the last decade itself.

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Such an unprecedented pace of growth has been brought about the precise levels of change that Kurzweil was so enthusiastic about. Today’s smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Meanwhile, India has managed to provide the cheapest telephony services around the world, which has hit rock bottom after the entry of Reliance Jio. This has ensured access to those even at the bottom of the pyramid.

A rise in internet penetration has distinct positive effects on economic growth of a country.
A rise in internet penetration has distinct positive effects on economic growth of a country. Wikimedia Commons

Even though consumers have come to be accustomed to fast-paced changes within the telecom sector, the entry of Jio altered the face of the industry like never before by changing the very basis of competition. Data became the focal point of competition for an industry that derived over 75 percent of its revenue from voice. It was quite obvious that there would be immediate economic effects due to it. Now that we’re nearing a year of Jio’s paid operations, during which time it has even become profitable, we saw it fit to quantify its socio-economic impact on the country. Three broad takeaways need to be highlighted.

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First, the most evident effect has been the rise in affordability of calling and data services. Voice services have become practically costless while data prices have dropped from an average of Rs 152 per GB to lower than Rs 10 per GB. Such a drastic reduction in data prices has not only brought the internet within the reach of a larger proportion of the Indian population but has also allowed newer segments of society to use and experience it for the first time. Since the monthly saving of an average internet user came out to be Rs 142 per month (taking a conservative estimate that the consumer is still using 1 GB of data each month) and there are about 350 million mobile internet users in the country (Telecom Regulatory Authority of India data), the yearly financial savings for the entire country comes out to be Rs 60,000 crore.

To put things in perspective, this amount is more than four times the entire GDP of Bhutan. Therefore, mere savings by the consumer on data has been at astonishing proportions.

Today's smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Wikimedia Commons
Today’s smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Wikimedia Commons

Now, this data has been used for services that have brought to life a thriving app economy within the country. So, the second level of impact has been in the redressal of a variety of consumer needs — ranging from education, health and entertainment to banking. For instance, students in remote areas can now access online courseware and small businesses can access newer markets. Information asymmetry has been considerably reduced.

Third, a rise in internet penetration has distinct positive effects on economic growth of a country. These effects arise not merely from the creation of an internet economy, but also due to the synergy effects it generates. Information becomes more accessible and communication a lot easier. Businesses find it easier to operate and access consumers. Labour working in cities has to make less frequent trips home and becomes more productive as a result. Education and health services become available in inaccessible locations. Multiple avenues open up for knowledge and skill enhancement.

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An econometric analysis for the Indian economy showed that the 15 percent increase in internet penetration due to Jio and the spill-over effects it creates will raise the per capita levels of the country’s GDP by 5.85 percent, provided all else remains constant.

Thus, India’s telecom sector will continue to drive the economy forward, at least in the short run, and hopefully catapult India into 20,000 years of progress within this century, as Kurzweil postulated. The best approach for the state would be to ensure the environment of unfettered competition within the industry. Maybe other sectors of the economy ought to take a leaf out of the telecom growth story. The Indian banking sector comes to mind. However, that is a topic for another day. (IANS)

(Amit Kapoor is Chair, Institute for Competitiveness, India. He can be contacted at Amit. Kapoor@competitiveness.in and tweets @kautiliya. Chirag Yadav, a senior researcher at the institute, has contributed to the article.)