Along with sanitation, the government has also launched schemes to improve housing and provide drinking water. Here, it may be seen from the data presented that the rate of progress has not been faster than before, and the extent of shortfall from the ideal 100% coverage remains considerable.

Poverty

Historically, the poverty rate in India has been estimated using data from a consumption expenditure survey conducted periodically by the National Sample Survey Organisation (NSSO). For the survey conducted in 2017-18, the results were not released by the government, citing flawed methodology, but with no further explanation given. This means that in recent years, there has been no authentic measure of consumption poverty, which is considered as the most appropriate indicator of poverty.

The government has recently released a factsheet on the findings of a survey of consumption expenditure undertaken in 2022-23. As the detailed report is yet to be released, it is not possible to provide estimates of poverty as of now. However, available information allows for the following observations: Per capita rural consumption growth has remained unchanged in real terms over the period 2012-13 to 2022-23 compared to that registered during 2000-01 to 2011-12. The growth rate of average urban consumption in real terms, however, declined over the same time span. Note that this is consistent with the finding that the growth of aggregate income has slowed in the middle of the decade from 2011-12 to 2022-23, as demonstrated in Part I.

So far, the government had been projecting an estimate of multidimensional poverty – produced by the United Nations Development Programme (UNDP) as part of a global exercise – as a record of its success at poverty reduction. The multidimensional poverty index is meant to capture several deprivations experienced by individuals. Significantly though, it does not include income or consumption, and it has been asserted that its components are not commensurate, making the interpretation of the index difficult. Nevertheless, what does the multidimensional poverty index show for India? In Table 4, we see that the incidence of poverty has certainly come down over the past decade, but the rate of decline is no greater than what it has been since 2005.

Table 4. Trend in multidimensional poverty

Year	Multidimensional Poverty Index	Incidence of poverty	Population that exited poverty (million)
2005-06	0.28	55.1	-
2015-16	0.12	27.7	275
2019-21	0.07	16.4	140

Note: ‘Exit from poverty’ is for the intervening period

Source: UNDP, Global Multidimensional Poverty Index 2022

Food security

Food security remains a challenge in India, as indicated by the share of the population that can afford a healthy diet. Data issued by the Food and Agriculture Organization (FAO) (Table 5) show that close to three-fourths of the Indian population could not afford a healthy diet in the years reported in the table. This is far higher than the figure for the world as a whole. Neither the existence of a public distribution system (PDS) for some food items nor the inflation targeting policy have been successful in ensuring food security for the mass of the Indian population. The consequence of a high price of food for both welfare and the expansion of the economy, does not figure sufficiently in discussions on the Indian economy. This evidence also points to the pitfall in focusing on inflation alone when assessing economic performance. In an economy with low standards of living on average, the price level would matter even when there is no inflation. This is the case with the price of food – while the average inflation rate has been lower since 2014, food price inflation has been high in recent years in India.

Table 5. Share of population that cannot afford a healthy diet

	India		World
	% share	Population (million)	% share	Population (million)
2017	78.8	1,066.8	43.8	3,124.9
2018	73.2	1,001.9	41.8	3,019.1
2019	71.4	986.9	41.2	3,005.5
2020	76.2	1,064.0	43.3	3,191.9
2021	74.1	1,043.0	42.2	3,139.5

Source: FAO (2023) 

As a cross-check on the FAO study, we may refer to two studies on the cost of living done in India. The first is a study of the cost of food in Mumbai, which revealed that the cost of a vegetarian thali (various dishes served on a plate) rose by 65% between 2018 and 2023 while, during this period, the wage of a casual worker increased by 37% and the wage of a salaried worker increased by 28% (Radhakrishnan and Loganathan 2023). Another is an ethnographic study of headload workers in Delhi’s Azadpur Market (Yadav 2023), which records the  statement by workers that they cannot afford to eat vegetables – ironically the very commodity that they are hired to transport on their backs.

Distribution

Finally, we come to the distribution of income. In the case of a growing economy this translates to the question of how inclusive the growth has been, an aspect that has featured little in the official narrative on the economy. However, this crucial question is very difficult to answer, as we are hampered by a near total absence of data that could serve as a building block to measuring inequality satisfactorily. The World Inequality Report, a leading source of information on income distribution across the world, states this to be the reason why its entries for India end with the year 2019.

Indirect methods may be devised to get at the bottom of the question of how the growth in India is being distributed, and we adopt one such method here. We rely on what we believe is one of the better sources of data on wages in India, namely, the data on agricultural wages gathered by the Labour Bureau. These are based on market quotations rather than answers given in surveys. Also, unlike data gathered from income tax records, which surely have value in determining the distribution of income, the wage data convey information on the level of living. In Table 6 below we present data on real wages for three groups of rural workmen. The absence of data on women workers in the source is unfortunate, as women have historically constituted at least half the workforce employed in the cultivation of certain crops.

Table 6. Rural wage growth

	2014-15	2015-16	2016-17	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
Agricultural labour
Daily wage (in Rs.)	224.6	236.9	252.6	267.1	277.4	287.1	309.9	323.2	345.7
Real wage (index)	100.0	100.0	101.5	103.6	104.5	103.7	105.6	104.5	104.6
Non-agricultural labour
Daily wage (in Rs.)	237.7	249.7	261.3	273.8	284.8	293.9	315.3	326.6	348.0
Real wage (index)	100.0	99.6	99.2	100.3	101.3	100.3	101.5	99.8	99.5
Construction labour
Daily wage (in Rs.)	275	288.1	303.9	319	328.7	341.2	362.2	373	393.3
Real wage (index)	100.0	99.3	99.7	101.0	101.1	100.7	100.8	98.5	97.2
Index of real per capita income (national)
Real per capita GDP	100.0	106.6	114.0	120.4	126.9	130.4	120.4	129.6	137.2

Sources: (i) The real wage has been calculated from Labour Bureau Data data on wages and the Consumer Price Index for agricultural workers published by the Reserve Bank of India (RBI). (ii) Real GDP data are from the National Accounts Statistics, Ministry of Statistics and Programme Implementation.

The data on real wages show the following trends since 2014: With respect to agricultural labour there is a mild increase in the real wage when viewed over the period as a whole. However, this movement is truncated. The real wage peaks midway through, in 2018-19, and has remained stagnant since. Nevertheless, it has been higher on average since 2014.

However, the increase is dwarfed when compared with the movement of per capita income. Over the period 2014-2023, real per capita income has increased by 37% while the real wage of agricultural labour has increased by less than 5%. Compared to the wages of the agricultural workers, the real wage of non-agricultural and construction workers is lower at the end of the period studied. The Sixth Economic Census of India (2016) reports that 51.7% of India’s employed are in rural areas, and of these the overwhelming majority (68.9%) are non-agricultural workers. It is implied that for about 35% of India’s workforce, real wages have stagnated since 2014.    

The data also allow us to say something about the distribution of income, however indirectly. We know that in 2022-23, the daily wage of an agricultural worker on an annualised basis was only two-thirds of per capita income of the country. Now, the information that during 2014-2023 real per capita income grew approximately nine times faster than the real wage of these workers suggests a growing inequality of incomes in the economy¹. Chancel et al. (2022) state that “India stands out as a poor and very unequal country with an affluent elite.” This appears to be accurate; the growth in India since 2014 has not been spread equally.

We next compute the movement in real incomes using another dataset, namely, the Periodic Labour Force Survey (PLFS). The index of real earnings for all categories of workers for which data are available is presented in Table 7.

Table 7. Real earnings by worker category

Year	Casual	Regular	Self-employed
2017-18	100.0	100.0	100.0
2018-19	106.0	95.3	87.7
2019-20	107.8	92.9	83.7
2020-21	108.5	94.0	76.1
2021-22	117.6	91.3	80.1
2022-23	118.0	87.7	78.5

Note: Earnings are indicated as index numbers, with the base year 2017-18 equal to 100.
Source: Money earnings have been deflated by the Consumer Price Index (Combined).

Of the three categories of workers for which the PLFS publishes data, there has been a growth of the real earnings of casual workers. On the other hand, the earnings of regular employees (wage earners or salaried) and the self-employed show a decline. In case of the latter, the decline is considerable. We can get at the proportion of the population involved in this decline as follows. The PLFS 2022-23 reports that the shares of casual workers, regular workers and the self-employed in total employment are 21.9%, 20.8% and 57.3%, respectively. This would imply that for well over three-quarters of the workforce, real earnings have declined since 2017-18. Comparison with the movement of real per capita income suggests a growing polarisation on the income distribution.

Summing up

Since 2014, the economy has shown marked improvement with respect to the provision of sanitation facilities. Access to toilets has grown at a much faster rate. On all other standard indicators, however, progress has been no greater than what was registered in the previous decade, or is slower in some cases. Notably, GDP growth has actually slowed after 2016-17. Whether this can be reversed by the currently high levels of public investment – reflecting a delayed turn to a Keynesian strategy – remains to be seen. There is evidence that a substantial section of the economy may be struggling to make ends meet. This is seen in the data on the access to food, which shows that over 75% of the population cannot afford a healthy diet. Finally, there is indirect evidence of a growing polarisation of the income distribution.  

The views expressed in this post are solely those of the authors, and do not necessarily reflect those of the I4I Editorial Board.   

The first part of this series is available here.

Note:

1. This is based on the assumption that there is no increase in employment among the employed (that is, they continue to work the same number of hours). 

Further Reading

• Chancel, L, T Piketty, E Saez and G Zucman (2022), ‘World Inequality Report 2022’, World Inequality Lab. An executive summary of the report is available here.
• Radhakrishnan, V and S Loganathan (2023), 'Cost of preparing meals at home rose by 65% in five years, wages by just 28%-37%', The Hindu, 30 August.
• Yadav, A (2023), 'Workers at India’s Largest Mandi Still Paid Decades-Old Rates, Can’t Afford Vegetables', The Wire, 29 May.