GDP Growth & Poverty: India’s Hovering Over Poverty Lines

I deal with non-random sampling of the Indian Household Consumer Expenditure Survey, by adjusting the median annual per capita consumption. While comparing absolute and relative methodologies for calculating poverty rates in India, I show that the World Bank methodology produces higher absolute poverty rates than the relative 60% of the median annual consumption methodology; spatial analysis used for robustness, confirms that neighbouring states present very different poverty rates, emphasising the effects of local legal and welfare systems in every Indian state. I then use a logit maximum likelihood model to show how 5-Year Indian GDP growth, preceding the 2009-2010 Household Consumer Expenditure Survey used for this chapter, has had a lagged effect on enhancing the chances of poverty in Indian households. This is more prominent in the case where the relative methodology is used for estimating poverty. Furthermore, I show how households in Indian states that have experienced Services-led GDP growth in particular, are more prone to be poor, both in the case of 5-year and 3-year growth, where the absolute methodology is used to draw poverty lines. Where the relative methodology is used, shorter-term Services-led growth seems to benefit Urban households only, in relation to poverty.