COMPARATIVE STUDY OF INDIA AND CHINA USING PERCENTAGE OF PEOPLE LIVING IN EXTREME POVERTY AS DEVELOPMENT INDICATOR
There are many of economic, political and social indicators of development, ranging from ‘Hard’ economic indicators such as Gross National Income (and all its variations), to various poverty and economic inequality indicators, to the Sustainable Development Goals, which focus much more on social indicators of development such as education and health, all the way down to much more subjective development indicators such as happiness. Amongst these one indicator alone does not help us understand the complete economic scenario of a particular country. Compilation and study of some or all of these indicators will give you a clearer idea about the economic development of the country.
INDICATOR STUDIED: The Percentage of People Living on Less than $1.25 a day (poverty)
There are still around 800 million people around the world living on less than $1.25 a day (PPP), the figures for some of these countries are below:
? The Democratic Republic of Congo (88%)
? Bangladesh (47%)
? India (26%)
? China (6%)
Looking at absolute poverty statistics like this gives us a much fuller understanding of the lack of development in certain countries – in DRC, you can clearly see that poverty is endemic (absolute poverty is a significant problem in many Sub-Saharan African countries), and we can also see that absolute poverty is still a significant problem in India (mainly rural India) and while the 6% is quite low in China, this 6% represents 10s of millions of people, given the large overall population size.
COMPARATIVE STUDY OF INDIA AND CHINA
? NOTE: though it is The Democratic Republic of Congo (88%) and china (6%) that lie in the two extremes of the table, comparison with India is more accurate considering the relatively large population in both the countries (China is the most populous country with approximately 1.42 billion people in 2018. India is second largest country by population with approximately 1.35 billion inhabitants in 2018.)
POVERTY IN INDIA
Poverty is a significant issue in India, despite being one of the fastest-growing economies in the world, clocked at a growth rate of 7.11% in 2015, and a sizable consumer economy. The World Bank reviewed and proposed revisions on May 2014, to its poverty calculation methodology and purchasing power parity basis for measuring poverty worldwide. According to this revised methodology, the world had 872.3 million people below the new poverty line, of which 179.6 million people lived in India. In other words, India with 17.5% of total world’s population, had 20.6% share of world’s poorest in 2011. As of 2014, 58% of the total population were living on less than $3.10 per day.3 According to the Modified Mixed Reference Period (MMRP) concept proposed by World Bank in 2015, India’s poverty rate for period 2011-12 stood at 12.4% of the total population, or about 172 million people; taking the revised poverty line as $1.25.
India Poverty rate since 1993 based on World Bank $1.99 PPP poverty line.
The World Bank has been revising its definition and benchmarks to measure up poverty since 1990, with a $1.25 per day income on purchasing power parity basis as the definition in use from 2005 to 2013. Some semi-economic and non-economic indices have also been proposed to measure poverty in India; for example, the Multi-dimensional Poverty Index placed 33% weight on number of years spent in school and education and 6.25% weight on financial condition of a person, in order to determine if that a person is poor.
From late 19th century through early 20th century, under British colonial rule, poverty in India intensified, peaking in the 1920s. Famines and diseases killed millions each time. After India gained its independence in 1947, mass deaths from famines were prevented. Rapid economic growth since 1991, has led to sharp reductions in extreme poverties in India. However, those above poverty line live a fragile economic life. As per the methodology of the Suresh Tendulkar Committee report, the population below the poverty line in India in 2009-2010 was 354 million (29.6% of the population) and that in 2011-2012 was 269 million (21.9% of the population). The Rangarajan Committee said in 2014 that the population below the poverty line in 2009-2010 was 454 million (38.2% of the population) and that in 2011-2012 was 363 million (29.5% of the population). Deutsche Bank Research estimated that there are nearly 300 million people who are middle class. If former trends continue, India’s share of world GDP will significantly increase from 7.3% in 2016 to 8.5% by 2020. In 2015, around 170 million people, or 12.4%, lived in poverty (defined as $1.99 (Rs 123.5)), a reduction from 29.8% in 2009.
Approximately 763 million people in India were living below this poverty line in 2011.
Each state in India has its own poverty threshold to determine how many people are below its poverty line and to reflect regional economic conditions. These differences in definition yield a complex and conflicting picture about poverty in India, both internally and when compared to other developing countries of the world.
Economic impact of British imperialism
Warren Hastings and the East India Company were accused of charges including mismanagement of the Indian economy. Contemporary historian Rajat Kanta Ray argues the economy established by the British in the 18th century was a form of plunder and a catastrophe for the traditional economy of Mughal India, depleting food and money stocks and imposing high taxes that helped cause the famine of 1770, which killed a third of the people of Bengal.
Reduction in poverty
One of the main reasons for record decline in poverty is India’s rapid economic growth rate since 1991. Another reason proposed is India’s launch of social welfare programs such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Midday Meal Scheme in government schools. Klonner and Oldiges, in a 2012 study, conclude that MGNREGA helps reduce rural poverty gap (intensity of rural poverty) and seasonal poverty, but not overall poverty. However, there is a disturbing side, as deprivation has tended to increase, and that too among the most deprived sections. According to the latest statistics published by the Census of India, among scheduled tribes 44.7% of people were farmers working on their own land in 2001; however, this number came down to 34.5% in 2011. Among scheduled castes this number declined from 20% to 14.8% during the same period. This data is corroborated by other data from the census, according to which the number of people who were working not on their own land but on others’ land (landless laborers), increased from 36.9% in 2001 to 44.4% among scheduled castes SC and from 45.6% to 45.9% among scheduled tribes.
Types of poverty
At the regional level, the marginality of central and eastern India is explained largely by adverse agrarian relations. Poverty has persisted in these areas though there are good endowment of natural resources and a relatively strong focus of Indian development planning on “backward areas”. It was estimated in previous reports that more than seventy per cent of India’s poor population reside in six states that include Uttar Pradesh, Bihar, Madhya Pradesh, Maharashtra, West Bengal and Orissa Uttaranchal, Jharkhand and Chattisgarh. In four of these states, Bihar, Orissa, Madhya Pradesh and Uttar Pradesh, and Assam there is high levels of poverty (Mehta and Shah 2003).
Rural vs urban
It is clear from various surveys and poverty reports that Most of the rural population in India and in other developing countries is living in deprived way because they do not own assets like land, they work as agricultural labourers, get insufficient and insecure employment and less salary. Degrees of inaccessibility, development stage of the region, low level of social capital are major correlative aspects that causes rural poverty. Though small farmers having some access to land, but they are dependent on unpredictable natural conditions, markets and chances of income generation. Poverty in rural India also has dimensions of caste, ethnicity and gender. Scheduled Castes and Scheduled Tribes of India’s rural areas are the poorest people that constitute about 40 to 50 percent of its population. When assessing the urban poverty in India, it is also a major worry for policy makers and researchers as number of poor is increasing due to fast urbanization. The Urban Poverty Report 2009 has shown that India has entered the Eleventh Plan period with an impressive record of economic growth. However, the incidence of decline of urban poverty has not augmented with GDP growth. In fact, urban poverty will become a major challenge for politicians in India as the urban population is growing which leads to urban poverty. The poverty rates as estimated in, “the MRP-consumption distribution data of the 61st Round are 21.8 percent in the rural areas, 21.7 percent in the urban areas and 21.8 percent for the country as a whole” (Poverty Estimates For 2004-05 2007:2).
Effects of poverty
There have numerous efforts been made by government to alleviate poverty. Poverty is inter-related to other problems of underdevelopment. In rural and urban societies, the nature of poverty can be very different. In urban areas, people often have access to health and education but more the problems faced by people due to poverty like overcrowding, unsanitary conditions, pollution, insecure houses. When appraising the factors lead to rural poverty, it is found that there is often less access to education, health and many other services but people usually live in healthier and safer environments. Since the mitigation of poverty is major aim of development work, it is necessary to understand the way to measure poverty. Development means that there has been some improvement and improvements must be measurable. Government expenditure in India is divided into non-development and development spending, and the latter is further subdivided into spending on social and economic services. Social services include health, labour, social welfare and other community services, while economic services include such sectors as agriculture, industry, trade and transportation.
Poverty and employment issue:
It is a major issue in country like India. In the presence of inadequate subsidies and low levels of wealth, joblessness will be correlated with high degrees of poverty. However, employment alone may not assure a non-poor status. In India, majority of people do not get high salary to buy the minimum consumption products. It is vital for policy maker to comprehend that whether poverty is a result of a lack of employment opportunities, or due to low wages. If all employed persons get sufficient wages to live above the poverty line but not all persons are employed, the mandatory approach is one of employment generating policies. If people are employed but have low productivity and earn low incomes, then the policy prescription is one of increasing the productivity of labour. In India, the actual poverty calculation is done as the consumption of the entire household is obtained and divided by the household size. This gives the per capita consumption in the household.
Gender Bias and poverty:
Gender bias can operate in two different ways. First, women may be discriminated against in the work. Discriminating employers may favour males to female candidates. If we see the other aspect, women may not be recruited in high salary jobs, not because the employer discriminates against them, but because they are not found appropriate for such jobs. This could happen if the job requires skills, and women are not competent than males. This gets reflected in lower incomes among females. If women are less skilled than males, then the responsibility for this kind of perception lies within the household, where the parents train, or educate, the boy child more than the girl child. While less schooling means less of human capital. This is another reason why females may earn less income.
Poverty and health issues:
The issue of poverty and health within the nation has remained predominant since Indian independence. The poverty dominant factor that leads to health related problems in both urban and rural populace. The rapid increase of the population, especially the slum inhabitants primarily suffers from Tuberculosis, Malaria and some water borne diseases. The major cause of these diseases is unhygienic environment. In slums area, there is lack of water, sanitation facility that leads to the growth of deadly diseases among the dwellers. The government has provided numerous medical facility centres for the poor people. The government should implement some new schemes for the slum dwellers. Some cleanliness awareness programme should be launched to generate wakefulness among poor for basic health knowledge. Some of the diseases such as tuberculosis, cholera transmit due to unhygienic atmosphere. In rural India, the major cause of health associated problems are poverty and lack of education. There are many disadvantages for which the government policies are still ineffective, especially related with health issue
POVERTY IN CHINA
In China today, poverty refers mainly to the rural poor, as decades of economic growth has largely eradicated urban poverty. The dramatic progress in reducing poverty over the past three decades in China is well known. According to the World Bank, more than 500 million people were lifted out of extreme poverty as China’s poverty rate fell from 88 percent in 1981 to 6.5 percent in 2012, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms.
Since the start of far-reaching economic reforms in the late 1970s, growth has fueled a remarkable increase in per capita income helping to lift more people out of poverty than anywhere else in the world: its per capita income has increased fivefold between 1990 and 2000, from $200 to $1,000. Between 2000 and 2010, per capita income also rose by the same rate, from $1,000 to $5,000, moving China into the ranks of middle-income countries. Between 1990 and 2005, China’s progress accounted for more than three-quarters of global poverty reduction and a big factor in why the world reached the UN millennium development of dividing extreme poverty by two. This incredible success was delivered by a combination of a rapidly expanding labour market, driven by a protracted period of economic growth, and a series of government transfers such as an urban subsidy, and the introduction of a rural pension. Independent studies by Gallup indicate the poverty rate in China fell from 26% in 2007 to 7% by 2012, although World Bank extrapolations suggest that the percentage of the population living below the international poverty line continued to fall to 4.1 percent in 2014. As of 2018 the number of people in poverty living below the national poverty line is around 30 million, about 2% of the population with hopes of totally eradicating poverty by 2020.
At the same time, however, income disparities have increased. The growing income inequality is illustrated most clearly by the differences in living standards between the urban, coastal areas and the rural, inland regions. There have also been increases in the inequality of health and education outcomes, and increased attention to unequal outcomes for ethnic minorities. To alleviate the situation, the Chinese government shifted its policy in recent years to encourage urban migration, fund education, health, and transportation infrastructure for poor areas and poor households.In addition the government is attempting to rebalance the economy away from investment and exports toward domestic consumption and public services, to help reduce social disparities. Relocation of the poor from poverty stricken regions to more developed urban areas is also being implemented as part of the holistic plan to tackle rural poverty.
China has maintained a high growth rate for more than 30 years since the beginning of economic reform in 1978, and this sustained growth has generated a huge increase in average living standards. 25 years ago, China had many characteristics in common with the rest of developing Asia: large population, low per capita income, and resource scarcity on a per capita basis. But in the 15 years from 1990–2005, China averaged per capita growth of 8.7%
The whole reform program is often referred to in brief as the “open door policy”. This highlights that a key component of Chinese reform has been trade liberalization and opening up to foreign direct investment, but not opening the capital account more generally to portfolio flows. China improved its human capital, opened up to foreign trade and investment, and created a better investment climate for the private sector.
After joining the WTO China’s average tariffs have dropped below 100%, and to around 5% for manufactured imports. It initially welcomed foreign investment into “special economic zones”. Some of these zones were very large, amounting to urban areas of 20 million people or more. The positive impact of foreign investment in these locations led to a more general opening up of the economy to foreign investment, with the result that China became the largest recipient of direct investment flows.
Effects of poverty
Cities vs. countryside
At the end of 2012 China became an urbanised country: its urban population (52%) is now larger than its rural one, for the first time in history. Still the problem remains that the other 48% suffers from a dual system that privileges cities for both social benefits (pension, healthcare, schools) and economic opportunities. The consequences for social stability and poverty in China are quite severe: tens of thousands of farmers are forced out of their land every year by private contractors for the sake of cities’ expansion and the wealth gap between urban and rural inhabitants has never been so big.
Forgotten by the economic boom
Poverty in China may be blatant in cities, but it’s in rural areas that the problem is most dire. In many villages, those who manage to sell everything they produce will only make about $1000/year. Earning that much means they don’t receive government support anymore and have to handle housing and other basic necessities on their own. At the same time, the soil in China yield less and less crops (particularly in arid provinces) and it’s often only enough to feed oneself properly. So, most of the younger generation leaves their villages to work in nearby cities and send money back to their parents. That remains the most common pension system in China. Inequalities between cities and rural areas keep growing and even between rural areas themselves.
Migrant workers: the cycle of discrimination and poverty
The appeal of cities has led some 250 million people to leave the countryside and create a new social class of its own: the migrant workers. They are workers (often with their families) registered as rural in their hukou who have decided to work in cities. They haven’t been accepted or registered as urban and as such they lose their most basic rights under the Chinese constitution: healthcare, education and social security.
To summarize, Poverty has been major issue to people because it causes the serious setback and hinder national development. It is prevalent at global scale and threatens some economic especially those in the Least Developing countries. Hence, the scale of poverty though varying in different parts of the world is known to be noticeable in the LDCs. Poverty is multidimensional Deficiency in income, illiteracy, malnutrition, mortality, morbidity, access to water and sanitation, susceptibility to economic shocks. Income deprivation is linked in many cases to other forms of deprivation, but do not always move together with others.
Theoretical studies and economic survey have shown that poverty has adverse impact on health of people. Inequality, population explosion, are some major issues which leads to poverty. Raanan Weitz (1986) stated that “While humanity shares one planet, it is a planet on which there are two worlds, the rich and the world of the poor”. These poor world countries are called the Third World. They are characterized by low monetary growth, low per capita income, low standards of living, and low level of technology, high illiteracy rate, and political instability. Allan Cochrane avowed that: A crucial aspect of poverty is the way in which it reduces ability of people to participate in the normal lives of their communities with stress being placed on the deprivation which results from the lack rather than low income itself”. Poverty can influence policy interfere in any society and it is central to strategy debates concerning development on safety issue. And hence the development of both India and China can be studied in terms of percentage of poor people.