New Delhi: Attacking the Modi government citing a World Bank report, the Congress Sunday claimed that sharpening inequality is now firmly embedded in the nature of the country’s economic growth, and called for a compelling need for tax reforms in GST, ending “brazen corporate favouritism” and providing income support for families.
Congress general secretary in-charge communications Jairam Ramesh said the World Bank has released its Poverty and Equity Brief for India this month, and the report raises several concerns even as the Modi government spins it to its benefit.
In its report, the World Bank has said, “Over the past decade, India has significantly reduced poverty. Extreme poverty (living on less than USD 2.15 per day) fell from 16.2 per cent in 2011-12 to 2.3 per cent in 2022-23, lifting 171 million people above this line.”
In his statement on the report, Ramesh noted that as per calculations based on the international poverty line (USD 2.15/ day), poverty has continued its downward trend in recent years to reach extremely low levels.
“This reflects the success of India’s growth story – which began with liberalisation in June 1991 and which has since taken a momentum of its own – and that of several social welfare interventions developed by Dr Manmohan Singh’s government during 2004-14,” he said.
Ramesh claimed the most important intervention is the MGNREGA, 2005 which has effectively set a floor on the annual income for crores of families, acting as a safety net to keep families out of poverty and the National Food Security Act, 2013 that provides the foundation for the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKY).
He, however, pointed out that the World Bank has also warned that more updated data — adoption of purchasing power parity conversion factor from 2021 as compared to that of 2017 — would result in a higher rate of extreme poverty.
“Changes in the questionnaire design, survey implementation, and sampling in the Household Consumption Expenditure Survey 2022-23 present challenges from making comparisons over time,” the Congress leader said, citing the report.
“It is worth recalling that these changes were made after the Government rejected the previous iteration of the survey (conducted in 2017-18) after it showed falling consumption in rural areas,” he said.
As a lower middle-income country, the appropriate rate to measure poverty in India is that of USD 3.65/day, Ramesh said, adding that by this measure, the poverty rate for India in 2022 is significantly higher at 28.1 per cent.
“Wage disparity in India remains high, with the median earnings of the top 10 per cent being 13 times higher than the bottom 10 per cent in 2023-24. Moreover sampling and data limitations suggest that consumption inequality (as measured by Government data) may be underestimated,” he alleged.
Ramesh argued that the report, therefore, has several takeaways for Indian policymakers such as the significant variance between differing poverty lines shows that large sections of the population are only marginally above the international extreme poverty line.
“Social welfare systems such as MGNREGA and the National Food Security Act 2013 cannot be abandoned but must be strengthened to ensure that they protect these segments from negative shocks,” he asserted.
Ramesh said the Congress’ long-standing demand to increase MGNREGA wages, and to conduct the decadal Population Census (due in 2021) and include 10 crore additional persons in the ambit of the NFSA, finds new urgency based on these numbers.
“The lack of clarity and transparency over the prevalence of poverty in India is a result of this Government’s confused and opaque policymaking.
“Since the Rangarajan Committee Report submitted in 2014, the Union Government has not set any updated poverty line for the country. The Government must do so immediately,” he said.
Asserting that data quality, consistency, and integrity are of the highest priority, Ramesh said the government’s recent track record on this front — best exemplified by the suppression of the Consumption Expenditure Survey 2017-18 – is not inspiring.
“In fact, blatant data doctoring and manipulation is part of the Modi government’s tool-kit when economic realities are contrary to its claims and boasts,” he alleged.
Ramesh claimed that “sharpening inequality” is now firmly embedded in the nature of our economic growth and its trajectory fuelled by the Modi government’s policies and the widening gap between the privileged few and the dispossessed many can no longer be denied.
“There is a compelling need for tax reforms in GST to mitigate its regressive impacts, ending tax terrorism to stimulate private corporate investment, ending brazen corporate favouritism and providing income support for families and incentives for household savings,” the Congress general secretary said.
The World Bank report said that rural extreme poverty dropped from 18.4 per cent to 2.8 per cent, and urban from 10.7 per cent to 1.1 per cent, narrowing the rural-urban gap from 7.7 to 1.7 percentage points, a 16 per cent annual decline.
The report said that India also transitioned into the lower-middle-income category. Using the USD 3.65 per day LMIC poverty line, poverty fell from 61.8 per cent to 28.1 per cent, lifting 378 million people out of poverty.
The World Bank Poverty and Equity Briefs highlight poverty, shared prosperity and inequality trends for over 100 developing countries.
The briefs are released twice a year for the Spring and Annual Meetings of the World Bank Group and International Monetary Fund, and help users understand a country’s poverty and inequality context at-a-glance and seek to keep poverty reduction on top of the world’s agenda.
