In News:

The World Bank has set a clear mission: ending extreme poverty and boosting shared prosperity on a livable planet. This new edition of the biennial series, previously titled Poverty and Shared Prosperity, assesses the three components of the mission and emphasizes that reducing poverty and increasing shared prosperity must be achieved without high costs to the environment.

Extreme Poverty in India:

• Current Poverty Status (2024):
  • 129 million Indians are living in extreme poverty, defined as earning less than $2.15 (?181) per day.
  • This marks a significant improvement from 431 million in 1990, demonstrating progress in poverty alleviation.
• Poverty Trends:
  • In 2021, there was a reduction of 38 million people in extreme poverty, bringing the total to 167.49 million.
  • However, higher poverty standards (set at $6.85 (?576) per day) now show more Indians below the poverty line than in 1990, mainly due to population growth.
• Survey Methodology:
  • The 2022-23 Household Consumption and Expenditure Survey (HCES) in India used the Modified Mixed Reference Period (MMRP) method to improve data accuracy.
  • The report suggests the need for careful analysis of the survey data, which may impact future poverty estimates.

Global Poverty Trends:

• Slowdown in Poverty Reduction:
  • Global poverty reduction has slowed considerably, with 700 million people (8.5% of the global population) living in extreme poverty in 2024.
  • The slowdown is attributed to factors like low economic growth, the COVID-19 pandemic, and increased fragility.
• Challenges in Achieving Targets:
  • The global extreme poverty rate is expected to be 7.3% in 2030, which is double the World Bank's target of 3%.
  • At current rates, extreme poverty eradication by 2030 is unlikely. It could take decades to eradicate extreme poverty, and over a century to lift people above the $6.85/day threshold.
• Impact of Polycrisis:
  • Polycrisis refers to the confluence of multiple crises—slow growth, climate risks, and increased uncertainty—making global poverty reduction more challenging.
  • Global prosperity has also been impacted, with slower income growth, particularly after the pandemic.

India's Role in Global Poverty Reduction:

• Contribution to Global Poverty:
  • India’s contribution to global extreme poverty is expected to decline significantly over the next decade. However, even if India eradicates its extreme poverty by 2030, the global extreme poverty rate would only fall from 7.31% to 6.72%, still above the UN SDG target of 3%.

Proposed Pathways for Addressing Poverty:

• Faster and Inclusive Growth:
  • Focus on increasing labor productivity, income, and employment to boost economic growth inclusively.
• Climate Resilience:
  • Strengthen risk management and mitigation efforts to protect vulnerable populations from climate shocks, ensuring that growth does not worsen environmental degradation.

Global Priorities:

• Low-Income Countries: Prioritize poverty reduction through investments in human, physical, and financial capital to foster growth.
• Middle-Income Countries: Focus on inclusive income growth that reduces vulnerability, and seek synergies such as cutting air pollution alongside poverty reduction.
• High-Income Countries: Accelerate climate mitigation efforts while managing the transition costs involved.