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World Bank: Same Odds of Escaping Poverty in India, United States

January 21, 2015 by Brett Wilkins in Asia/Pacific, Rich & Poor with 0 Comments
Economic inequality remains a huge problem in India. (Suvodeb Banerjee)

Economic inequality remains a huge problem in India. (Suvodeb Banerjee)

A newly-released World Bank report states the odds of escaping poverty are about the same in the United States and India.

The report, “Addressing Inequality in South Asia,” concludes that Indian “mobility in earnings — measured by the ability to move out of poverty and into the middle class — is comparable to that of the United States.”

The report found that sons of Scheduled Caste and Scheduled Tribe households, two official designations for groups of historically disadvantaged people, are no longer stagnating in the same low-paying jobs at which their fathers toil. Muslims, Scheduled Castes, Scheduled Tribes and ‘Other Backward Classes’ — another officially designated group made up of educationally and socially disadvantaged groups and comprising around 40 percent of India’s population — are enjoying similar upward mobility to higher-caste Hindus, the report also stated.

“There is good news — India is no longer the land of extremes and there are some bright spots,” Martin Rama, one of the authors of the report and World Bank Chief Economist for South Asia, is quoted by the Hindu.

Overall, the World Bank found that 15 percent of Indians, or 40 percent of the nation’s poor, moved above the poverty line in recent years. During the same period, nine percent of the total population entered India’s burgeoning middle class.

However, nine percent also fell back into poverty, highlighting the risk faced by even members of India’s 250 million-strong middle class.

Another finding of the World Bank report is that India’s rapid urbanization is actually reducing inequality.

“Urban jobs have become a ticket to the middle class,” it states. “Upward mobility is much stronger in cities, where even self-employment and casual work can lead to substantial gains in consumption.”

Onno Ruhl, World Bank Country Director in India, said the report demonstrates that the administration of Prime Minister Narendra Modi should “strive for universal health and sanitation, leverage the opportunity for urbanization and create jobs for all.”

India must continue to “build skills not just through technical training but also with servicing the population with primary and secondary education and nutrition,” said Ruhl.

Poverty remains a huge problem in India, with nearly a quarter of the population earning a dollar a day or less. Fully 40 percent of Indians are living below the new international poverty line, earning $1.25 or less daily. The World Bank estimates that one out of every three poor people in the world is Indian.

Economic growth has also been highly uneven among various social and economic groups, geographical regions and urban versus rural areas.

In the United States, one out of every six people is poor, according to Census Bureau figures. Economic inequality is growing, with the gap between the wealthiest one percent of Americans and everyone else widening to record levels. The American middle class is no longer the world’s wealthiest, with Canada having surpassed its southern neighbor in recent years.

In 2013, Pulitzer Prize-winning tax policy journalist David Cay Johnston reported that between 1966 and 2011, average inflation-adjusted income of the bottom 90 percent of US workers grew by a negligible $59. Meanwhile, income of the top 10 percent of workers soared by $116,071. Depicted on a chart with $59 represented as one inch, it would take a piece of paper more than 163 feet long to show $116,071.

American economist Robert Shiller, winner of the 2013 Nobel Prize, has asserted that economic inequality is the biggest problem facing the United States today.

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