The late, sharp-witted economist Michael Mussa, my first boss at the IMF, once told me that every statistic must pass the “smell test.” I recalled this sage advice recently when Indian authorities published the first driblets of a consumption survey in more than a decade. The numbers stink.
Economists have long maintained that India’s official GDP data overstate growth. Before the G20 summit in September last year, the Indian National Statistical Office issued a brazen overestimate. The last decennial census was in 2011. A survey highlighting stubbornly high malnutrition and anemia cost the survey’s director his job.
The last comprehensive consumption expenditure survey in 2012 showed that 22 percent of the population was living in poverty. The government junked a 2018 survey when leaked data indicated an increase in the poverty rate.
Illustration: Yusha
Not surprisingly, the new partial consumption figures generated much excitement. Hastily, former IMF executive director for India Surjit Bhalla and economist Karan Bhasin proclaimed — under the Brookings Institution’s imprimatur — that extreme poverty had been “eliminated.” While such misuse of statistics can be expected to amplify the India hype in elite echo chambers, poverty remains deeply entrenched and broader deprivation appears to have increased as inflation erodes incomes of the poor.
Measuring poverty is a complicated task, the essence of which lies in establishing a poverty threshold. The World Bank, which initially set the international poverty line at US$1 per day in 1990, updated the figure to US$1.90 in 2011 to account for inflation. Only those who cannot afford to spend US$1.90 per day are classified as “extremely poor.”
For India, the US$1.90 threshold represents below-subsistence-level consumption. As economists Shaohua Chen and Martin Ravallion have said, it allows for minimal food consumption and little else.
In 2012, US$1.90 translated to a meager 30 rupees a day in purchasing power parity (PPP) — barely enough for two basic meals, poverty expert and independent researcher S. Subramanian said.
In analyzing the recently released consumption-expenditure data, Bhalla and Bhasin seem to have converted the US$1.90 threshold into rupees at the IMF-reported PPP rate of 22.9 rupees per US dollar. Their analysis categorizes people as poor only if they cannot spend 45 rupees a day. This approach is tantamount to wishing away poverty. Assuming an average annual inflation rate of 6 percent, as stated in the government’s news release, the set of goods that cost 30 rupees in 2012 would now cost at least 58 rupees. Moreover, low-income households face diabolical inflation inequality: higher-than-average inflation rates due to the type of goods they buy, their limited mobility, which leaves them at the mercy of local monopolists, and their inability to buy in bulk.
Regrettably, Indian authorities do not provide inflation data segmented by household income. If the annual inflation were 8.5 percent for the bottom half of Indian households, they would need about 80 rupees per day to cover their basic needs. In that case, India’s poverty rate would be about 22 percent, essentially the same as in 2012.
Setting the bar slightly higher underscores the grim reality.
In 2014, a committee led by former Reserve Bank of India governor Chakravarthi Rangarajan said that the appropriate poverty line for rural regions was 33 rupees a day — close to the World Bank’s line — while urban residents required at least 47 rupees per day to cover commuting and housing expenses.
Subramanian said that the urban poverty line was a gross underestimate; he estimated a daily expenditure of 88 rupees to avoid severe deprivation.
Adjusting the Rangarajan and Subramanian estimates using plausible inflation rates leads to a stark conclusion: Urban poverty rates range between 40 and 60 percent, which means that 30 to 40 percent of all Indians are poor. This is likely conservative, given the sharp increase in education, transportation and housing costs, as well as out-of-pocket medical expenses.
With numerous parents forced to choose between food and their children’s education, is it any wonder that the government feels obliged to provide free supplementary grain rations to 60 percent of the population?
High, possibly rising, poverty can be partly attributed to the 2016 demonetization that nullified 86 percent of India’s currency and to the haphazard implementation of the Goods and Services Tax of 2017, both of which caused huge distress to the vulnerable. The COVID-19 pandemic delivered another harsh blow, causing millions of Indian workers to revert to low-productivity agricultural jobs.
Today, 70 million more Indians work in agriculture than in 2018, owing to the scarcity of non-agricultural job opportunities, which are mostly confined to financially and physically precarious sectors such as construction, street vending, security and domestic work. Given the significant hardship faced by millions of Indians, the pre-election release of partial consumption data invites suspicion, and the declaration of the end of poverty borders on the malicious.
Moreover, their assertion that consumption inequality has declined sharply is risible: Wealthy Indians do not report their US$400 designer sneakers, Lamborghinis or lavish parties to government surveyors. The gap between India’s rich and poor is startling. Consider the US$120 million prewedding celebrations for tycoon Mukesh Ambani’s son: The lad wore a US$1 million watch, a superstar received US$6 million to perform and the Indian aviation authority temporarily cleared a nearby airport to fly in international celebrities.
The lack of comprehensive consumption and inflation data makes it impossible to get an accurate picture of Indian poverty. Sadly, the government’s strategically released data and cherry-picked analysis continue to reek.
Ashoka Mody, a visiting professor at Princeton University, previously worked at the World Bank and the IMF.
Copyright: Project Syndicate
Congratulations to China’s working class — they have officially entered the “Livestock Feed 2.0” era. While others are still researching how to achieve healthy and balanced diets, China has already evolved to the point where it does not matter whether you are actually eating food, as long as you can swallow it. There is no need for cooking, chewing or making decisions — just tear open a package, add some hot water and in a short three minutes you have something that can keep you alive for at least another six hours. This is not science fiction — it is reality.
A foreign colleague of mine asked me recently, “What is a safe distance from potential People’s Liberation Army (PLA) Rocket Force’s (PLARF) Taiwan targets?” This article will answer this question and help people living in Taiwan have a deeper understanding of the threat. Why is it important to understand PLA/PLARF targeting strategy? According to RAND analysis, the PLA’s “systems destruction warfare” focuses on crippling an adversary’s operational system by targeting its networks, especially leadership, command and control (C2) nodes, sensors, and information hubs. Admiral Samuel Paparo, commander of US Indo-Pacific Command, noted in his 15 May 2025 Sedona Forum keynote speech that, as
In a world increasingly defined by unpredictability, two actors stand out as islands of stability: Europe and Taiwan. One, a sprawling union of democracies, but under immense pressure, grappling with a geopolitical reality it was not originally designed for. The other, a vibrant, resilient democracy thriving as a technological global leader, but living under a growing existential threat. In response to rising uncertainties, they are both seeking resilience and learning to better position themselves. It is now time they recognize each other not just as partners of convenience, but as strategic and indispensable lifelines. The US, long seen as the anchor
Kinmen County’s political geography is provocative in and of itself. A pair of islets running up abreast the Chinese mainland, just 20 minutes by ferry from the Chinese city of Xiamen, Kinmen remains under the Taiwanese government’s control, after China’s failed invasion attempt in 1949. The provocative nature of Kinmen’s existence, along with the Matsu Islands off the coast of China’s Fuzhou City, has led to no shortage of outrageous takes and analyses in foreign media either fearmongering of a Chinese invasion or using these accidents of history to somehow understand Taiwan. Every few months a foreign reporter goes to
RSS