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'Extreme Poverty Remained Low Due to Food Transfers During COVID': IMF on India

The food grain ration was doubled for each recipient from 5 kg of wheat (or rice) per month to 10 kg in 2020.

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India
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The International Monetary Fund (IMF) Working Papers on Tuesday, 5 April, released its report titled 'Pandemic, Poverty & Inequality: Evidence from India', stating that extreme poverty was as low as 0.8 percent in the pre-pandemic year 2019 and food transfers were instrumental in ensuring that it remained at that low level in the pandemic year 2020.

The report also adds that after the food subsidies that were provided in the pandemic year 2020, inequality was at 0.294, coming close to its lowest level of 0.284, which was observed in 1993-94.

The report, authored by Surjit S Bhalla, Karan Bhasin, and Arvind Virmani, states that the food support (rations) was increased during the pandemic – the food grain ration was doubled for each recipient from 5 kg of wheat (or rice) per month to 10 kg in 2020.

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Key Highlights:

The report says that unit-level National Service Scheme (NSS) data for the 1999-2000, 2004-5, and 2011-12 surveys converge to the conclusion that for all total consumption quintiles, 10 kg of grain was the average monthly consumption per capita. It indicated:

  • The food support (rations) was increased during the pandemic – the food grain ration was doubled for each recipient from 5 kg of wheat (or rice) per month to 10 kg in 2020.

  • In 2020, for the first time since the inception of the Public Distribution System (PDS), the government was supplying, in full, the basic food ration needed to the bottom two-thirds of the population (coverage of PDS as per the Food Security Act).

The food grain ration was doubled for each recipient from 5 kg of wheat (or rice) per month to 10 kg in 2020.

The paper also presents estimates of poverty and consumption inequality in India for each of the years 2004-05 through the pandemic year 2020-21. These estimates include, for the first time, the effect of in-kind food subsidies on poverty and inequality:

  • Extreme poverty was as low as 0.8 percent in the pre-pandemic year 2019, and food transfers were instrumental in ensuring that it remained at that low level in the pandemic year 2020.

The food grain ration was doubled for each recipient from 5 kg of wheat (or rice) per month to 10 kg in 2020.
  • Post-food subsidy inequality at 0.294 is now very close to its lowest level of 0.284 observed in 1993/94.

The food grain ration was doubled for each recipient from 5 kg of wheat (or rice) per month to 10 kg in 2020.

The report concludes,

"Our results also demonstrate the social safety net provided by the expansion of India’s food subsidy programme absorbed a major part of the pandemic shock. The programme provided insurance to the poor and prevented an increase in the prevalence of extreme poverty in India. This illustrates the robustness of India’s social safety architecture as it withstood one of the world’s biggest exogenous income shocks."

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