PMGKY eradicates extreme poverty: Surjit S Bhalla, Karan Bhasin, and Arvind Virmani’s 52-page research also demonstrate that the growth of India’s food subsidy program absorbed a significant portion of the pandemic shock. According to the study, extreme poverty rates in 2019 were as low as 1%, a significant drop from 2011 levels.
The inclusion of food subsidy data, according to the report, has aided in the conclusion that the ‘official poverty level’ should be raised from (Population living on $1) PPP of $1.9 to $3.2. Moving from Rs. 865 per person per month to Rs. 2250 per person per month in rupees.
IMF paper refutes Pew study about poverty
The document also refutes a Pew study that claims 75 million Indians have been forced into poverty, stating that the data was compiled in the absence of an “official” Consumption Expenditure Survey (2017-18). It also asserts that ‘severe poverty in India has been erased.
Surjit Bhalla (Executive Director, IMF India), Arvind Ramani (Founder Chairman, EGROW), and Karan Bhasin, a US-based scholar, are the writers.
What did the consumer survey from 2017-18 reveal?
- Between 2011-12 and 2017-18, the average real rural income consumption fell by 8.8%, while real urban consumption climbed by 2%.
- Inequality in rural regions has been decreased through ‘leveling down,’ which involves lowering everyone’s income but proportionately more for the wealthier than for the poorest.
- Since 1982, the largest decrease in actual consumption inequality has occurred.
- Extreme poverty grew from 12.2 percent in 2011-12 to roughly 17 percent in 2017-18, according to the NSS. CES absolute poverty has increased for the first time in the history of Indian records, from 1951 to the present.
- Inferred nominal average consumption in rural India in 2017-18 data was Rs. 1892 per capita per month (PCPM) and Rs. 3739 per capita per month (PCPM) in urban India, the lowest in Indian history.
How does this paper respond to such information?
- Food subsidies have consistently reduced poverty since the enactment of the Food Security Act (FSA) in 2013, according to this report, which dismisses the NSS 2017-18 consumer spending survey as “ill-fated.”
- The ‘Uniform recall procedure’ (URP), which is used to generate consumption data on a 30-day recall basis, is described as ‘outdated’ in this article, which disputes a Pew study that predicted 75 million Indians would be forced into poverty by 2020-21.
- This article asserts that extreme poverty has maintained at around 0.8 percent in both 2019 (0.76 percent) and 2020 (0.76 percent) using the “Modified mixed Recall technique” (MMRP), which is used to calculate consumption statistics on a 7-day recall basis (0.86 percent ). According to the MMRP, poverty stays at 2.5 percent without food assistance.
- Increased efficiency in the delivery of food subsidies with the usage of AADHAR.
- By incorporating NSS consumer surveys (health and education), non-food consumption data, and real wage growth, this paper claims that real urban consumption growth between 2011-12 and 2014-15 was 3.3 percent and rural growth was 8.6 percent, leading to the conclusion that “the 2017-18 survey cannot be considered credible.”
Other major findings from the IMF report include
- The pandemic is primarily a “temporary income shock.” A major part of the shock was absorbed by employing temporary fiscal policy actions, such as extending food distribution.
- Consumption inequality has declined to its lowest level since 1993-94 (when food handouts are taken into account).
- In comparison to 2004-11, consumption growth was determined to be higher in 2014-19.
- In India, extreme poverty has been erased.
India’s food distribution during the COVID pandemic
Free ration distribution was first promised under the PMGKY from April to June 2020 but was then extended until November 2021. PM Modi announced during the initial full lockdown that all recipients will receive 5 kg of free food grains, in addition to the standard quota set by the National Food Security Act. Aside from wheat and rice, each family member received 1 kg of Chana Dal for free each month.
The scheme is also part of the Centre’s ‘One Nation, One Ration Card’ (ONORC) initiative, which aims to allow all National Food Security Act (NFSA) migrant beneficiaries to get enough food grains from any fair price shop, anywhere in the country, by using their existing ration card with biometric authentication. By December 2020, the Centre says that 69 crore NFSA beneficiaries, or 86 percent of the NFSA population, will be covered by the ONORC scheme.