India has averted the rise in extreme poverty through the food security scheme, Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), according to the International Monetary Fund report.
A new IMF paper found that extreme poverty (less than PPP USD 1.9 per person per day) in India is less than 1 per cent in 2019 and it remained at that level even during the pandemic year 2020. Prime Minister Narendra Modi’s food security scheme, the Pradhan Mantri Garib Kalyan Anna Yojana, has been critical in preventing any increase in extreme poverty levels in India during the COVID-19 pandemic, added the report.
The new IMF paper, Pandemic, Poverty, and Inequality: Evidence from India, presented estimates of poverty (extreme poverty PPP USD 1.9 and PPP USD3.2) and consumption inequality in India for each of the years 2004-5 through the pandemic year 2020-21.
These estimates include, for the first time, the effect of food subsidies on poverty and inequality. Extreme poverty was as low as 0.8 per cent in the pre-pandemic year 2019, and food transfers were instrumental in ensuring that it remained at that low level in the pandemic year 2020. Post-food subsidy inequality at .294 is now very close to its lowest level of 0.284 observed in 1993/94.
A low level of extreme poverty in two consecutive years, and one including the pandemic, can be considered as an elimination of extreme poverty.
The PMGKAY was critical in preventing any increase in extreme poverty levels in India and the doubling of food entitlements worked substantially in terms of absorbing the COVID-19 induced income shocks on the poor, said the IMF report.
Meanwhile, PM Modi had announced the extension of PMGKAY last month till September 2022. Under the PMGKAY, free food grain is provided to those in need.
The scheme was kickstarted in March 2020 amid the COVID-19 pandemic in the country and it was extended till March 2022 in November last year for four months (December 2021-March 2022).
The scheme entails providing 5 kg foodgrains per person per month, over and above the regular monthly NFSA foodgrains.
The benefit is being provided to those covered under the National Food Security Act (NFSA) [Antodaya Anna Yojana and Priority Households] including those covered under Direct Benefit Transfer (DBT).
The government had in March 2020 announced the distribution of additional free-of-cost foodgrains (rice/wheat) to about 80 crore National Food Security Act (NFSA) beneficiaries in the wake of the situation created by COVID-19 so that the vulnerable households do not suffer on account of non-availability of adequate foodgrains.
The pandemic shock is largely a temporary income shock, said the IMF report, adding that a temporary fiscal policy intervention was the fiscally appropriate way to absorb a large part of the shock.
Consumption growth (an important determinant of poverty) was found to be higher in 2014-19 than the robust growth observed in 2004-2011.
The paper also examined, in some detail, the plausibility of the results contained in the NSS consumer expenditure survey of 2017-18, added report.