India to see a negligible to low impact on people falling into poverty due to price rise, says UNDP

Impact of inflation on India’s poor would be negligible, a report by United Nation Development Program (UNDP) has said.  Finance Minister Nirmala Sitharaman attributed this to well-tailored program of the Modi Government including free ration and direct cash transfer.

In a report titled, ’Addressing the Cost-of-Living Crisis in Developing Countries’, the UN agency measured the impact of inflation, disruptions in supply chain due to Ukraine crisis and Covid on cost of living. It took three poverty lines — $1.90 per day, $3.30 per day and $5.50 per day.  

Accordingly, the report highlighted that inflation in India will push 0 per cent of the population below the poverty line of $1.90 per day, just 0.02 per cent of the population below the $3.30 per day line, and just 0.04 per cent of the population below the upper poverty line of $5.50 per day.”

Food, energy prices

Overall, the report said that the soaring food prices and the energy prices can push up to 71 million people into poverty globally. Data shows countries such as Denmark, Sweden, the UK, Italy, Ireland, Australia are facing the risk of its people falling into poverty, but India is not in this category. India has taken the route of food security and cash transfers to farmers as the choice of mitigating the threat of poverty. On this UNDP said: “A recent comparative assessment of price and income support measures shows that targeted transfers not only help poorer households cope with price spikes but also have a significantly lower impact on carbon emissions.”

Commenting on the report, Sitharaman said the Modi Government has, from the beginning of the pandemic, implemented a policy wherein those at the bottom of the pyramid were provided immediate and constant support in the form of food and cash transfers.

She highlighted that under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), the government provided 5 kg free ration per person per month in addition to their normal quota of foodgrain under the National Food Security Act. From April 2020 to September 2022, the government has allocated 1,003 lakh tonnes of foodgrain for the PMGKAY, benefiting 80 crore people for two-and-a-half year.

In addition, during the initial months of the pandemic, the government transferred ₹500 per month for three months to 20 crore women Jan Dhan account holders.

Earlier, IMF, in its working paper, studied how extreme poverty is disappearing at a rapid pace due to PMGKAY. The same phenomena of disappearing poverty was also captured by World Bank’s working paper.

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