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Extreme poverty almost wiped out in India: IMF

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New Delhi, Apr 07: A new paper by the International Monetary Fund has found that extreme poverty (less than PPP$ 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 in 2000.

Extreme poverty almost wiped out in India: IMF

The paper titled Pandemic, Poverty and Inequality: Evidence from India authored by Surjit Bhalla, Karan Bhasin and Arvind Virmani said that low level of extreme poverty in two consecutive years, and one including the pandemic, can be considered as elimination of extreme poverty.

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, the report added.

The pandemic shock is largely a temporary income shock; temporary fiscal policy interventions 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 2004-2011, the report further added.

Never before in Indian history (at least post 1982) has such a large decline in real consumption inequality occurred. The deviation in the Gini, for both rural and urban areas, has been in a narrow 1 to 2 ppt range, the paper said.

Our results also demonstrate the social safety net provided by the expansion of India's food subsidy program absorbed a major part of the pandemic shock," the authors stated. Such back-to-back low poverty rates suggest India has eliminated extreme poverty, the paper also said.

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