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The Wire
08-07-2025
- Business
- The Wire
The Hoax of Decline in Poverty in India
Rangarajan and S. Mahendra Dev have estimated poverty in India using the all India Consumption Expenditure Survey data from the 2022-23 and 2023-24 surveys. Their concept of poverty was the one recommended by the Rangarajan Committee on Estimating Poverty in India. Their paper shows that extreme poverty in India has declined significantly from 29.5% in 2011-12 to 9.5% in 2022-23 and to 4.9% in 2023-24. The decline is fairly rapid: 2.05 percentage point decline per year between the year 2011-12 and 2023-24. The World Bank also shows in its recent paper that at the poverty line of USD 2.15 (at 2017 PPP) per day, India's extreme poverty has declined from 16.2% in 2011-12 to 2.3% in 2022-23. That means about 170 million people have been lifted above the extreme poverty line in India during this period. The depth of poverty analysis by Rangarajan and Dev's paper also show that 50% of the poor lie between the 3rd and 4th quarter of the poverty line, both in 2011-12 and 2023-24. This means, most of the poor are concentrated around the poverty line. As regards the causes of this decline, the paper observes that this is due to rapid economic growth and safety nets, including free food grains to 81.35 crore people. However, they also observe that economic growth is important in this decline in poverty between 2022-23 (9.5%) and 2023-24 (4.9%) as there is no significant change in the welfare expenditure of the government during this period. It is too early to call this last decline a trend, with data for only two years. Concepts of poverty line The concepts of poverty used by both the sources are different. The Rangarajan Committee has defined the poverty line as simultaneous satisfaction of all three nutrient-norms, namely, a full range of policies and programmes for child nutrition support, public provisioning of a range of public goods and services aimed at the amelioration of the disease environment facing the population. The committee also preferred NSSO's estimates and decided not to use the NAS estimates and price relatives derived from the Consumer Price Indices. According to the committee (2014), the poverty line was Rs 972 for rural areas and Rs 1,407 for urban areas. The poverty lines computed as per capita monthly consumption expenditure for 2023-24 are Rs 1,940 for rural areas and Rs 2,736 for urban areas. This comes to Rs 64.66 per capita per day consumption expenditure for rural areas and Rs. 91.2 for urban areas. The concept of extreme poverty of the World Bank is defined slightly differently. The World Bank defines extreme poverty as 'deprivation in wellbeing'. The poor is one who does not have enough income or consumption, or who is below some adequate minimum threshold. According to the UN Guiding Principles on 'extreme poverty', extreme poverty is characterised by social exclusion and by an accumulation of insecurities in many areas of life, such as lack of identity papers, unsafe housing, insufficient food and lack of access to health care and to education. However, the World Bank also adds that it is extremely difficult to measure poverty in a rigorous way, and every country sets its own standards for what is necessary for basic living. This definition is translated into different amounts at different levels of development. For low income countries, the World Bank sets the extreme poverty line at USD 2.15 PPP, while it is USD 3.65 PPP for lower middle income level countries and USD 6.85 PPP for upper middle income countries. Some critical questions The World Bank has used USD 2.15 PPP while computing the extreme poverty in India, and based on it, it observed that 170 million people have crossed the poverty line. This is surprising because India is a lower middle income country, and its extreme poverty line is USD 3.65 PPP. If this poverty line was used, the number of people crossing it would be much less. Again, the poverty line of Rs. 64.4 (rural areas) and 91.1 (urban areas) computed by the Rangarajan-Dev paper also appears to be too low. No poverty can be measured by such low poverty lines. How can anyone live on these poverty lines at these consumption expenditures? Despite more than 806 million people getting free food grains, India's rank in global hunger index is at 105 out of 127 countries and the value of the hunger index is 27.3. This is declared as an 'alarming condition' by the Global Hunger Report, 2024. Again, when about 13.7% of the population in India is clearly undernourished and not getting minimum nourishment, how can the incidence of poverty be just 4.9, as suggested by the Rangarajan-Dev paper? How can 35.5% children under 5 years be stunted and 18.7% wasted if the poverty is just 4.9%? The latest NFHS survey-5 (National Health and Family Survey) also supports this data. Again, as per the latest data (PLFS 2023-24), about 20% of the Indian population is illiterate, and about 45% of the population has studied barely up to the Class 5, and here, there are serious problems about the quality of education. Consequently, more than 90% of the labour force is found in the informal economy getting low wages and poor social protection. To conclude, though India's GDP is growing at a 6-7% rate, people's vulnerability is declining extremely slowly. The incidence of poverty at 4.9% just does not match with the vulnerability of the Indian population. It appears that India should now totally discard this concept of '(extreme) poverty line' presented by the earlier committee. Indira Hirway is Director and Professor of Economics, Centre for Development Alternatives (CFDA), Ahmedabad. 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Yahoo
27-01-2025
- Business
- Yahoo
The markets: Central bank rate decisions, tech earnings, and key economic data
Stock markets posted consecutive gains last week following Donald Trump's inauguration. This week, attention shifts to critical interest rate decisions from the Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Canada (BOC). Additionally, major US tech firms, including Microsoft, Meta Platforms, Tesla, and Apple, are set to report their quarterly and full-year earnings. Large European corporations such as ASML and LVMH are also scheduled to release their results. Related LVMH misses expectations in the third quarter as China's weakness persists ASML continues to outshine rivals despite US trade restrictions Key economic data will include inflation reports from major European economies and the US fourth-quarter Gross Domestic Product (GDP) growth figures. Meanwhile, China will enter the Lunar New Year holiday from Tuesday onwards. The ECB is widely expected to lower the deposit rate by 25 basis points to 2.75% on Thursday, despite elevated inflation in recent months. Policymakers are increasingly concerned about the economic outlook, particularly in light of Donald Trump's return to the White House. Related Europe must be prepared for shifting US trade policy, Lagarde warns European Central Bank warns of how a shift in US trade policies could affect the EU Speaking at the World Economic Forum in Davos last week, ECB President Christine Lagarde emphasised the need for Europe to "be prepared" for potential shifts in US trade policy under President Trump. She also expressed confidence that Eurozone inflation remains on track to return to the 2% target this year. Analysts expect the ECB to continue cutting rates after this week's meeting, with a total reduction of at least one percentage point anticipated in 2025. Germany, France, and Spain will release their preliminary Consumer Price Indices (CPIs) for January. Inflation is expected to cool in Germany and France but remain at an elevated level in Spain, according to consensus forecasts. Eurozone inflation increased to 2.4% in December, its highest level since July. Additionally, the bloc will release its flash GDP figures for the fourth quarter of 2024. Economists anticipate economic growth will have slowed to 0.1% quarter-on-quarter, down from 0.4% in the third quarter. The fourth-quarter earnings reports from LVMH and ASML are scheduled for release on Tuesday and Wednesday, respectively. Markets have nearly fully priced in a no-change of the Fed funds rate on Wednesday, which is currently between 4.25% and 4.5%, according to the CME FedWatch Tool. The Fed has reduced rates three times since September, with a total reduction of a full percentage point. Inflation ticked up to 2.9%, and is the highest since July, while the core inflation cooled to 3.2%, the slowest increase since August. Despite this, resilient labour markets and economic growth will likely make the Fed hold back from its easing cycle. US President Trump urged to bring the interest rates down last week but central banks are independent from political influence as Fed Chair Powell indicated previously. The Fed will be more focused on the economic trajectory, although it is concerned about potential rising inflationary pressure if Trump imposes sweeping tariffs on other countries. Related Donald Trump's Davos speech: Should Europe really fear tariffs? The US economy is expected to grow at an annualised pace of 2.7% in the fourth quarter, down from 3.1% in the previous quarter. However, this rate still reflects solid growth. This week's GDP reading will be the first of three, or an "Advance" estimate. Related Netflix reports record-breaking quarterly results as shares soar The US earnings season will remain in focus following Netflix's blowout results last week. The technology sector rallied amid President Trump's pro-tech policies, particularly after he announced a $500 billion (€480 billion) joint venture with tech giants to develop the US artificial intelligence infrastructure. Earnings from Meta, Microsoft, and Tesla will be released after US markets close on Wednesday, followed by Apple on Thursday. The BOC is expected to lower interest rates by 25 basis points to 3% on Wednesday. Economic growth in Canada has stalled, and inflationary pressures have eased, with December's annual inflation cooling to 1.8%, down from 1.9% in November. Trump's tariff threats have increased the likelihood of further rate cuts. However, stronger-than-expected job data for December may complicate the outlook for future rate reductions. China will release its manufacturing and non-manufacturing Purchasing Managers' Index (PMI) data on Monday before the country enters a week-long holiday. Business activity in the manufacturing sector has returned to expansion since October, suggesting that the government's sweeping stimulus measures are taking effect. The non-manufacturing PMI has been expanding through 2024, and both indices are expected to remain on similar trajectories in January. Australia's fourth-quarter inflation data will be closely monitored for clues regarding the Reserve Bank of Australia's (RBA) policy path. Headline CPI is forecast to rise by 2.5%, down from 2.8% in the third quarter. Easing inflationary pressures are likely to prompt the RBA to commence rate cuts this year. Sign in to access your portfolio
Euronews
27-01-2025
- Business
- Euronews
The markets: Central bank rate decisions, tech earnings, and key economic data
Stock markets posted consecutive gains last week following Donald Trump's inauguration. This week, attention shifts to critical interest rate decisions from the Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Canada (BOC). Additionally, major US tech firms, including Microsoft, Meta Platforms, Tesla, and Apple, are set to report their quarterly and full-year earnings. Large European corporations such as ASML and LVMH are also scheduled to release their results. Key economic data will include inflation reports from major European economies and the US fourth-quarter Gross Domestic Product (GDP) growth figures. Meanwhile, China will enter the Lunar New Year holiday from Tuesday onwards. Europe The ECB is widely expected to lower the deposit rate by 25 basis points to 2.75% on Thursday, despite elevated inflation in recent months. Policymakers are increasingly concerned about the economic outlook, particularly in light of Donald Trump's return to the White House. Speaking at the World Economic Forum in Davos last week, ECB President Christine Lagarde emphasised the need for Europe to "be prepared" for potential shifts in US trade policy under President Trump. She also expressed confidence that Eurozone inflation remains on track to return to the 2% target this year. Analysts expect the ECB to continue cutting rates after this week's meeting, with a total reduction of at least one percentage point anticipated in 2025. Germany, France, and Spain will release their preliminary Consumer Price Indices (CPIs) for January. Inflation is expected to cool in Germany and France but remain at an elevated level in Spain, according to consensus forecasts. Eurozone inflation increased to 2.4% in December, its highest level since July. Additionally, the bloc will release its flash GDP figures for the fourth quarter of 2024. Economists anticipate economic growth will have slowed to 0.1% quarter-on-quarter, down from 0.4% in the third quarter. The fourth-quarter earnings reports from LVMH and ASML are scheduled for release on Tuesday and Wednesday, respectively. United States Markets have nearly fully priced in a no-change of the Fed funds rate on Wednesday, which is currently between 4.25% and 4.5%, according to the CME FedWatch Tool. The Fed has reduced rates three times since September, with a total reduction of a full percentage point. Inflation ticked up to 2.9%, and is the highest since July, while the core inflation cooled to 3.2%, the slowest increase since August. Despite this, resilient labour markets and economic growth will likely make the Fed hold back from its easing cycle. US President Trump urged to bring the interest rates down last week but central banks are independent from political influence as Fed Chair Powell indicated previously. The Fed will be more focused on the economic trajectory, although it is concerned about potential rising inflationary pressure if Trump imposes sweeping tariffs on other countries. The US economy is expected to grow at an annualised pace of 2.7% in the fourth quarter, down from 3.1% in the previous quarter. However, this rate still reflects solid growth. This week's GDP reading will be the first of three, or an "Advance" estimate. The US earnings season will remain in focus following Netflix's blowout results last week. The technology sector rallied amid President Trump's pro-tech policies, particularly after he announced a $500 billion (€480 billion) joint venture with tech giants to develop the US artificial intelligence infrastructure. Earnings from Meta, Microsoft, and Tesla will be released after US markets close on Wednesday, followed by Apple on Thursday. Canada The BOC is expected to lower interest rates by 25 basis points to 3% on Wednesday. Economic growth in Canada has stalled, and inflationary pressures have eased, with December's annual inflation cooling to 1.8%, down from 1.9% in November. Trump's tariff threats have increased the likelihood of further rate cuts. However, stronger-than-expected job data for December may complicate the outlook for future rate reductions. Asia-Pacific China will release its manufacturing and non-manufacturing Purchasing Managers' Index (PMI) data on Monday before the country enters a week-long holiday. Business activity in the manufacturing sector has returned to expansion since October, suggesting that the government's sweeping stimulus measures are taking effect. The non-manufacturing PMI has been expanding through 2024, and both indices are expected to remain on similar trajectories in January. Australia's fourth-quarter inflation data will be closely monitored for clues regarding the Reserve Bank of Australia's (RBA) policy path. Headline CPI is forecast to rise by 2.5%, down from 2.8% in the third quarter. Easing inflationary pressures are likely to prompt the RBA to commence rate cuts this year.
