Changing population by economic status disheartening for India
By Dr Gyan Pathak
India, the largest populated country of the world, has been undergoing significant changes in population distribution by economic status, which need urgent attention of the government. Though extreme poverty has declined by 12.5 per cent and the moderate poor population came down by 5 per cent, the number of poor rose by 11.4 per cent between 2011 and 2019. During this period non-poor people in the country rose by 6 per cent.
It has been revealed in the newly released report by the World Bank titled “Rethinking Social Protection in South Asia: Towards Progressive Universalism”, which categorized the people earning less than US $2.15 a day calculated in 2017 at PPP (purchasing power parity) basis as extremely poor, earning between $2.15 and $3.65 as moderate poor, between $3.65 and $6.85 as poor, and above $6.85 as non-poor. The report divides the non-poor in two categories – first earning between $6.85 and $15 a day, and the second earning $15 and above.
As per the study, there were only 1.5 per cent people in the country who were earning above $15 a day in 2011, but their number grew to 3.5 per cent in 2019. During this period the percentage of people earning between $6.85 and $15 a day grew from 8.6 per cent to 12.6 per cent.
The poor people suffered the worst during this period whose percentage grew from 27.6 per cent to 39 per cent. It shows that earnings of the poor drastically declined. In the meantime, the percentage of moderate poor declined marginally from 39.8 percent to 34.8 per cent while extremely poor declined from 22.5 percent to 10 per cent.
This situation needs urgent attention of the government because many more people are only a shock-away from poverty who are presently in the category of non-poor earning between $6.85 and $15 a day.
Though the report says that in the last two decades, most countries in South Asia witnessed economic growth contributing to substantial reduction in poverty, poverty reduction has been significantly slower. Moreover, households with consumption per person in the moderate poor category account for approximately a third of the poor in the region. A large percentage of households is also vulnerable to poverty.
Poverty prevalence in the region exhibits large spatial disparities. For example, in 2019, the extreme poverty rate in India’s poorest state was more than three times the median state’s poverty rate, and, in six of the poorest states in the country, the extreme poverty rate was more than twice the median state’s poverty rate.
Rural residents and children are more likely to be poor. In 2019, 87.2 percent of the extreme poor in South Asia were living in rural areas. Among countries where recent data are available, the urban-rural gaps in extreme poverty are largest in Bangladesh, where 16 percent of the rural population was extremely poor versus 5.8 percent of the urban population, and smallest in Bhutan and Sri Lanka.
However, these gaps are substantially larger if one considers the US$3.65-a-day poverty line, particularly in Bangladesh and Pakistan. For example, the rural-urban poverty differential is a staggering 26.7 percent and 26.8 percent in Bangladesh and Pakistan, respectively.
In 2019, children constituted 34 percent of the population in South Asia and, in most South Asian countries, faced higher poverty levels (at US$3.65) than, for instance, the working-age population and the elderly. In Bangladesh, 17 percent of children were extremely poor, and58.5 percent of all children in the country were living below the US$3.65 poverty line, a significantly higher share than the corresponding shares of the elderly and working-age population. The same pattern applies in Pakistan, but with larger children-elderly and children-working-age population poverty differentials. High, stubborn levels of poverty mostly arise because of the limited creation of quality jobs, the study found.Between2000 and 2020, around 386 million South Asians entered the working-age population, whereas only 81 million jobs were added to the economies. Only Sri Lanka managed (until 2016) to create more jobs than labour market entrants.
The limited availability of quality jobs coincides with overall low levels of labour force participation, especially among women and youth. Labour markets in South Asia offer limited opportunities for the working‑age population, especially youth and women, to realize its full potential and contribute to the region’s growth and development. The average labour force participation rate in South Asia is 51 percent, much lower than the average in low-income countries, at 64 percent. The labour force participation rate is 24 percent among women and 81 percent among men.
Many young people in South Asia are also neither participating in the labour market, nor building skills to participate later on. The share of youth who were NEET (Not in Employment, Education or Training) among all youth in South Asia is above 33 percent, which is higher than the corresponding share among lower‑middle-income countries, at 28 percent. Among young women, 47 percent were NEET (versus 43 percent in lower-middle-income countries), compared with only 14 percent among young men.
South Asia has low employment ratios and high levels in the underuse of human capital, especially among the poor and vulnerable. In many countries in South Asia, less than 50 percent of the working-age population is employed. Low employment rates tend to be concentrated among the most vulnerable workers, for example, those in the lowest wealth quintiles and education levels. The prevalence of underemployment (the share of employed workers who work at less than minimum wage) is significant in many countries, reaching33 percent in Bangladesh, 32 percent in Maldives, 18 percent in Nepal, 14 percent in Bhutan, 13 percent in Pakistan, and 10 percent in India. Workers with lower levels of education and those in the poorest wealth quintiles are also more likely to suffer underemployment.
Most workers remain locked in informal and low-productivity jobs that do not allow them to escape vulnerability and improve economic mobility. There is also a higher share of workers engaged either in self-employment, or as unpaid family workers, reaching 73 percent in Bhutan, 58 percent in Bangladesh, 57 percent in Pakistan, 54 percent in India, 46 percent in Nepal, and 44 percent in Sri Lanka. These types of jobs do not offer workers regular income and other protections that could allow them slowly to build their savings base and escape poverty and vulnerability. This also makes these workers more vulnerable to shocks because they lack access to protection. (IPA Service)