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Estimating Poverty in India without Expenditure Data
This paper utilises the expenditure data from 2004–05, 2009–10, and 2011–12 to impute household expenditure into a survey of durable goods expenditure conducted in 2014–15. The model’s predictions are comparable to the World Bank’s current adjustment method for the rural areas but imply a slower rate of poverty reduction for urban areas. In two validation tests, using past data, three alternative model specifications perform worse than the preferred model. The analysis indicates that survey-to-survey imputation, when feasible, is a preferable alternative to the current method of adjusting survey-based poverty estimates to later years.
This paper explains the methodology and results of a survey-to-survey imputation exercise that was used to generate the 2015 headcount poverty estimates for India at the World Bank. India was selected as a pilot case because of its size and importance, as well as the lack of recent data on household living standards. The latest survey-based estimates of poverty are from 2011–12. The most recent nationally representative survey that could be used to impute poverty into a later year is the National Sample Survey Office (NSSO) expenditure on services and durables survey of 2014–15. The resulting poverty estimates from the imputation informed the 2015 poverty estimates—the latest available—marking the first time that the World Bank used this type of imputation method as an input into its global and regional poverty estimates.
Understanding the trends in poverty in India is not only vital to the Indian policymakers to measure changes in the welfare of the poor, but also has major implications for regional and global estimates of the prevalence of poverty. In 2013, an estimate of the number of extreme poor in India, defined as those consuming less than $1.90 per day per person, numbered 250 million.1 This means that India accounted for over a quarter of the global total of 783 million extreme poor. Although Nigeria has now likely surpassed India as the nation with the largest number of extremely poor persons, accurately monitoring of India’s progress in the fight against extreme poverty remains critical to assess the progress towards the goal of reducing poverty to less than 3% by 2030.
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