New Delhi – India's poverty rate has seen a significant decline, dropping to just 3.9% from nearly 30% in 2011-12, according to economist Shamika Ravi, a member of the Prime Minister's Economic Advisory Council. Despite this impressive reduction, the government continues its program of providing free food grains to a large segment of the population, a policy Ravi explains as crucial for social protection and nutritional improvement.
India's Poverty Decline and Social Safety Nets
During a discussion, Ravi addressed the common question: why maintain free ration distribution when poverty levels are so low? Her response highlighted the role of a welfare state. "Every welfare state provides different kinds of protection to its citizens," Ravi stated, drawing parallels with affluent Scandinavian countries, G7 nations, and emerging markets. She emphasized that as countries grow, they naturally expand social protection for their citizens, a practice India is now able to afford.
Beyond Eligibility: Actual Beneficiaries
While approximately 80 crore (800 million) people are eligible for free food grains, Ravi clarified that the actual number availing the benefit is closer to 55-56 crore (550-560 million). This distinction is important for understanding the program's reach and impact, ensuring that assistance is directed where it is most needed during challenging periods.
Boosting Nutrition and Dietary Diversity
A key argument put forth by Ravi is the program's positive impact on household nutrition. She explained that the savings from receiving free food grains allow families to reallocate their budgets towards more nutritious items. "Savings from food grains that households are having are getting channeled into expenditure on fruits, fresh fruits, milk and milk products, eggs, fish and meat," Ravi noted. This shift, she asserted, has effectively "fiscalised the food plate," leading to a significantly more diverse diet across the population.
The Economics of Distribution vs. Storage
When asked about the future of the free ration scheme, Ravi suggested that while revisions might occur over time, the current strategy is pragmatic. She pointed out that India produces a surplus of food grains, far exceeding its consumption. Distributing this surplus is often more economical than long-term storage, which incurs costs and risks of spoilage. "Storage is also expensive... it's cheaper than hoarding, storing over many periods of time," she explained, supporting the current distribution model as a wise and pragmatic approach.
Measuring Poverty: A Shifting Landscape
Ravi provided context on how the poverty rate was calculated, distinguishing between the Tendulkar poverty line, which primarily focuses on food requirements, and the Rangarajan poverty line, which incorporates broader expenditure categories like housing, transport, healthcare, and education. Using a consistent definition based on the Rangarajan poverty line, India's poverty rate has plummeted from nearly 30% in 2011-12 to its current 3.9%. This decline, she highlighted, is unprecedented and widespread, benefiting various social and religious groups across the country, with a notable convergence in poverty rates.