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LATEST NEWS UPDATES | Poverty is falling fast in India, but we still measure it terribly -Rukmini S

Poverty is falling fast in India, but we still measure it terribly -Rukmini S

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published Published on Oct 29, 2015   modified Modified on Oct 29, 2015
-The Hindu Business Line

Earlier this month, the World Bank decided to raise its global poverty line from $1.25 per day (in Purchasing Power Parity or PPP terms) to $1.90.

A monumental change in global poverty took place earlier this month, but don’t be surprised if the world doesn’t look very different to you.

Earlier this month, the World Bank decided to raise its global poverty line from $1.25 per day (in Purchasing Power Parity or PPP terms) to $1.90, the first major overhaul in ten years. How the Bank essentially constructs its poverty line is by taking the average of the national poverty lines of 15 of the world’s poorest countries (chiefly sub-Saharan countries and Nepal since 2005) and then converts this average into an internationally comparable number. For this number, it takes a basket of goods and services and calculates how much it would cost to buy these in various countries - think of it like a global exchange rate, essentially. What happened last week is that the World Bank decided to update the prices in this basket to 2011 prices (plus a few other tweaks) since incomes in these countries had risen, and that raised the poverty line - what was $1.25 at 2005 prices became $1.90 at 2011 prices.

In aggregate numbers, this means that there were 897 million poor people globally in 2012 by the new poverty line. By the old poverty line, there were over 1 billion poor people as of 2011. (It seems strange that raising the poverty line still led to a lower number of poor people, but the fact is that incomes have grown considerably too.) In long-term trends, the updating changes really quite little.

Here’s how India, China, Bangladesh and the world’s poverty levels had changed over the years according to the old poverty line.

Please click here to read more.

The Hindu Business Line, 27 October, 2015, http://www.thehindu.com/data/poverty-is-falling-fast-in-india-but-we-still-measure-it-terribly/article7810119.ece?homepage=true


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