India has made encouraging progress by halving its official poverty rate, from 45 percent of the population in 1994 to 22 percent in 2012.
McKinsey Global Institute (MGI) has created the Empowerment Line, an analytical framework that determines the level of consumption required to fulfill eight basic needs—food, energy, housing, drinking water, sanitation, health care, education, and social security—at a level sufficient to achieve a decent standard of living rather than bare subsistence.
In applying this metric to India, we found that in 2012, 56 percent of the population lacked the means to meet essential needs. By this measure, some 680 million Indians experienced deprivation, more than 2.5 times the population of 270 million below the official poverty line. Hundreds of millions have exited extreme poverty but continue to struggle for a modicum of dignity, comfort, and security. The Empowerment Gap, or the additional consumption required to bring these 680 million people to the level of the Empowerment Line, is seven times higher than the cost of eliminating poverty as defined by the official poverty line.
The full MGI report is here
* 50% of India's public spending on basic services does not reach the people
* 46% of basic services are not within reach for the average Indian household
* 75% of the potential impact [from the MGI plan] will come from jobs and productivity growth
* 70% increase needed in agricultural yields over the next decade
* 50% of public social spending is needed for health care, water, and sanitation, up from 20% today
If India’s recent weak economic momentum persists in the coming decade, in what we have termed the “stalled reforms scenario”, some 470 million people, or 36 percent of India’s population, would remain below the Empowerment Line in 2022 and as much as 12 percent would remain below the official poverty line.
Merely increasing government subsidies can achieve only a fraction of this goal, however. Our estimates indicate that as in the past, almost three-quarters of the potential impact of raising people above the level of the Empowerment Line depends on unlocking investment, job growth, and productivity. More public spending alone, without addressing issues of waste and inefficiency, is likely to deliver at most 8 percent of total potential impact.
The importance of this message cannot be overstated. Government spending is critical to ensure access to basic services, but simply channelling more money into the same programmes without addressing their operations and outcomes will deliver very little.
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McKinsey Global Institute (MGI) has created the Empowerment Line, an analytical framework that determines the level of consumption required to fulfill eight basic needs—food, energy, housing, drinking water, sanitation, health care, education, and social security—at a level sufficient to achieve a decent standard of living rather than bare subsistence.
In applying this metric to India, we found that in 2012, 56 percent of the population lacked the means to meet essential needs. By this measure, some 680 million Indians experienced deprivation, more than 2.5 times the population of 270 million below the official poverty line. Hundreds of millions have exited extreme poverty but continue to struggle for a modicum of dignity, comfort, and security. The Empowerment Gap, or the additional consumption required to bring these 680 million people to the level of the Empowerment Line, is seven times higher than the cost of eliminating poverty as defined by the official poverty line.
The full MGI report is here
* 50% of India's public spending on basic services does not reach the people
* 46% of basic services are not within reach for the average Indian household
* 75% of the potential impact [from the MGI plan] will come from jobs and productivity growth
* 70% increase needed in agricultural yields over the next decade
* 50% of public social spending is needed for health care, water, and sanitation, up from 20% today
If India’s recent weak economic momentum persists in the coming decade, in what we have termed the “stalled reforms scenario”, some 470 million people, or 36 percent of India’s population, would remain below the Empowerment Line in 2022 and as much as 12 percent would remain below the official poverty line.
Merely increasing government subsidies can achieve only a fraction of this goal, however. Our estimates indicate that as in the past, almost three-quarters of the potential impact of raising people above the level of the Empowerment Line depends on unlocking investment, job growth, and productivity. More public spending alone, without addressing issues of waste and inefficiency, is likely to deliver at most 8 percent of total potential impact.
The importance of this message cannot be overstated. Government spending is critical to ensure access to basic services, but simply channelling more money into the same programmes without addressing their operations and outcomes will deliver very little.
Read more »
