India recently fell from the top of the list in the ranking of countries living with extreme poverty. Defined as living under an income of $1.90 a day, India had remained at the top spot for many years. In 2016, India had an estimated 124 million people living in extreme poverty.

Due to longstanding economic efforts, the rate of poverty in India has fallen dramatically. Today it is estimated to be around 70 million. The numbers are still high, but the rate of reduction is nothing but optimistic. Every minute, about 44 Indians come out of poverty, which is one of the fastest rates of poverty reduction in the world. Studies indicate a staggering projection of zero percent extreme poverty by 2030.

Economic Growth in India

These projections rest solidly on The World Poverty Clock, which tracks poverty rates in real time. Its information is collected from domestic surveys and The International Monetary Fund’s data mapper, World Economic Outlook (IMF WEO). The clock’s projections suggest the gap between India and Nigeria (which now holds the most citizens living in extreme poverty) is widening. The World Poverty Clock has reported that by 2021, the forecast shows that the number of Indians living in extreme poverty will fall below 3 percent of the population.

India’s decline in poverty is correlated with its years-long economic growth. Over recent decades, the nation has implemented many economic efforts to counter economic instability. Ranil Salgado, the head of the IMF team for India has stated that a recent policy called the goods and services tax, which “created a unified national market for the first time by lowering internal barriers to trade – effectively establishing a free trade agreement for a market of 1.3 billion people.” The tax increases economic activity, creating jobs and customers. GDP has steadily grown in recent years at a rate of about 5-6 percent, but Salgado expects a rate of 7.3 percent for 2018-2019.

Necessary Steps to Reducing Poverty

In order to maintain this amount of growth and keep it healthy, India will have to monitor its growth and implement necessary policies. Nobel Peace laureate Muhammad Yunus believes India should encourage microfinance institutions “to fill up the gaps left by the conventional banks, that only cater to the rich.”

Access to finance is like economic breathing. In order to be independent and sustainable economically, individuals coming out of extreme poverty in India need the agency and independence microfinance legislation would create. If done right, Yunus is strong in his belief the U.N.’s projection of zero percent extreme poverty in India will be reached by 2030.

India is showing that this is not an impossible feat, but a very plausible one. The outlook shows that further growth is still needed, but this necessary first step is an encouraging one for the future of India.

– Yumi Wilson
Photo: Flickr