Mirroring a decline

The World Bank's 'Poverty and Shared Prosperity Report' — released on Wednesday — came up with a comprehensive assessment of global poverty in the aftermath of the Covid-19 pandemic. The findings are not so reassuring for the world and India. The headline projection of the report is that the world is most likely to miss on the goal of eradicating extreme poverty by the end of 2030, unless there is never-seen-before economic growth across the ensuing decade. The report marks the year 2020 as a 'turning point' when the "era of global income convergence yielded to divergence." Quite understandably, the report attributed the U-turn in poverty reduction to an "extraordinary series of shocks" over the past few years — referring perhaps to the pandemic and the war. The report estimated that the pandemic threw 70 million people into extreme poverty in 2020, globally, taking the overall number to 719 million. In the Indian context, the report estimated that the pandemic year witnessed an increase in the number of poor in India between 2.3 crore and 5.6 crore. It cited lack of credible data for the range variance. In relative terms, India's share in the overall increase in the number of the poor stands somewhere between 33 and 80 per cent. In terms of poverty alleviation, if there is anything more primary than appropriate policy interventions, it is the data around the number of the poor. Due to the lack of data, no substantive policy can be framed, let alone the implementation. The range of poverty estimate for India is rather too wide — leaving a large grey area that may be considered as an obstruction to poverty alleviation. The report said that post-2020 poverty estimates have not yet been officially finalised in the country. Even more shockingly, India has not released official survey data for poverty since 2011! In a nation identified with stark economic inequalities, this laxity is undesirable, harmful. According to World Bank Group president David Malpass, in order to improve the "grim outlook for billions of people globally", "adjustments of macroeconomic policies are needed to improve the allocation of global capital, foster currency stability, reduce inflation, and restart growth in median income." In failing to do so, nations can plunge into slow economic growth, higher interest rates, greater risk aversion and economic fragility. The choice is before the national leaders, and the time is to act wisely! More importantly, apart from these remedial measures, there is also a need to work on foundational aspects like health and education. World Bank's Chief Economist and Senior Vice President for Development Economics, Indermit Gill highlighted that "investing in better health and education will be crucial for developing economies, given the severe learning losses and health-related setbacks they suffered during the pandemic." At the same time, the bottom-line prescription on the fiscal policy front by the World Bank is to focus on three aspects — avoiding broad subsidies and increasing targeted cash transfers; focusing on long-term growth; and mobilising domestic revenues without hurting the poor. The World Bank report pointed out that developing countries bore the greater brunt of poverty increase than the developed world, and the road to recovery for them will be very tough. As India falls into the developing economy category, the task ahead for it is indeed uphill. The foremost challenge will be to furnish clear-cut, transparent data on the number of the poor in the country. This data can be adjusted for socio-economic variability and targeted measures can be initiated. Expecting any positive outcome amid lack of transparent data will be immaturity. The longer the extent of the problem remains hidden from the eyes of policymakers and the public, more hurting will be its perpetuation. India needs to take serious consideration of the policy prescriptions made by the World Bank, and customise it as per domestic requirements.