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World Bank says Poverty in India Worse than Officials Suggest


A new World Bank study says poverty rates in India may be higher than official statistics suggest. The study looks at factors that drive people into poverty or enable them to improve their economic conditions.

A World Bank study called "Moving Out of Poverty" says that according to many people, it is impossible to meet their basic needs or preserve their dignity on income levels that officially put them above the poverty line.

In other words, the definition in rural communities of what it means to be poor is at variance with definitions used by the government.

As a result, the World Bank study says the extent of poverty in the country could have been underestimated if people's perception is taken into account.

The income levels which define poverty vary across states, but according to official data about 250-million people - about one quarter of the country - lives on less than one dollar a day.

The study was carried out between 1995 and 2005 across 300 villages in some of India's poorest states - Assam, West Bengal and Andhra Pradesh, and Uttar Pradesh, also known as U.P. Two-thirds of India lives in rural areas.

Study editor Deepa Narayan says many people are pushed into poverty because of illnesses or due to social expenses that lead to a financial setback.

"In Assam, 50 percent of the reasons for falling down have to do with health shocks," Narayan said. "In U.P. health shocks are lower, but social shocks, which have to do with social expenditures, particularly in terms of marriages and funerals, but much more in terms of marriage, become very important. Assets particularly land, get sold to marry off daughters, once that is gone it is very difficult to continue making a living."

The study says that local democratic institutions at the village level, known as panchayats, are making a key difference in helping people move out of poverty in places where they function effectively.

Deepa Narayan also calls for the creation of better economic opportunities for people in villages by giving rural areas easier access to big markets.

"People do not want to migrate," Narayan said. "People migrate because they have no choice. One of the big things that needs to happen is connecting poor people's production activities to the distribution and procurement chains of large businesses. Because then you have connection to larger markets."

The World Bank study says helping poor people creating assets such as housing and land will be a key factor in helping them escape poverty.

Millions of people in India are still mired in poverty, despite the economic boom witnessed in recent years. As it begins its five-year term, the new government says it will target more inclusive growth to improve the welfare of poor people.

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