Economic Survey: Poverty ratio declines to 21.9 per cent

019Expenditure on Education increases to 3.3 per cent of GDP
United Nation’s Human Development Report signifies existing gaps in Health and Education indicators in India need to be bridged faster

The Economic Survey 2013-14 presented by the Finance Minister Shri Arun Jaitely has asked policy makers to design and execute development strategies targeting the young population that was approximately 58 per cent in 2001 and will increase to more than 64 per cent in 2021. The Government has to take timely action to make people healthy, educated and adequately skilled.

Social-sector expenditure Expenditure on social services by the general government (centre and states) as a proportion of total expenditure increased almost continuously from 23.8 per cent in 2008-09 to 25.2 per cent in 2013-14 (Budget Estimates). As a percentage of the Gross Domestic Product (GDP), expenditure on social services increased from 6.8 per cent in 2008-09 to 7.2 per cent in 2013-14 (BE).

As a percentage of GDP, expenditure on education has gone up from 2.9 per cent in 2008-09 to 3.3 per cent in 2013-14 (BE). There is need not only to increase it further, but also address quality issues. Expenditure on health is just 1.4 per cent of GDP. Though, in 2013-14, there was an increase in outlay by 7.44 per cent over the previous year still a lot more needs to be done to provide quality and affordable healthcare for the large Indian population.


The poverty ratio (based on the Monthly Per Capita Expenditure (MPCE) of Rs.816 for rural areas and Rs. 1000 for urban areas in 2011-12 at all India level), has declined from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12. In absolute terms, the number of poor declined from 407.1 million (40.71 crores) in 2004-05 to 269.3 million (26.93 crores) in 2011-12 with an average annual decline of 2.2 percentage points during 2004-05 to 2011-12.

India’s Human Development Rank and performance 

According to the United Nations Human Development Report (HDR) 2013, India has slipped down in HDI with its overall global ranking at 136 (out of the 186 countries) as against 134 (out of 187 countries) as per HDR 2012. It is still in the medium human development category with countries including China, Egypt, Indonesia, South Africa and Vietnam. India’s HDI of 0.554 in 2012 has slipped down a notch from 0.551 in 2011.

The existing gap in health and education indicators in India as compared to developed countries and also many of the developing countries highlights the need for much faster and wider spread of basic health and education. Life expectancy at birth was 65.8 year compared to 81.3 year in Norway, 73.7 year in China and 75.1 year in Sri Lanka as per HDR 2013. The Indian performance in mean years of schooling (4.4 years) is even below that of Bangladesh and Pakistan which have lower per capita incomes. However, in terms of average annual HDI growth rate for 2000-12, India is well ahead of many countries with high and very high human development.


Not only is inequality lower in India than many other countries, it has also decreased as reflected in a 9.2 per cent fall in its Gini coefficient from 36.8 during 2010-11 to 33.4 during 2011-12. As per the quintile income ratio, the inequality between the top and bottom quintiles in India was lower than in a large number of countries both developed and developing. The HDR measures inequality in terms of two indicators. The Gini Coefficient measures the deviation of distribution of income or consumption from a perfectly equally distribution among individuals within a country. The quintile income ratio is a ratio of the average income of the richest 20 per cent of the population to that of the poorest 20 per cent.


During 2004-05 to 2011-12, employment growth (Compound Annual Growth Rate[CAGR]) was only 0.5 per cent, compared to 2.8 per cent during 1999-2000 to 2004-05 as per usual status. Based on current daily status (CDS), CAGR was 1.2 per cent and 2.6 per cent respectively for the same periods. However, unemployment rate in India continued to hover around 2 per cent under usual status (principal+subsidary) and fell under CDS steeply from 8.2 per cent in 2004-05 to 5.6 per cent in 2011-12.

Inter-state comparison 

The inter-state comparisons of some major states which show varied performance furnish clear policy pointers like the need for greater focus on human development dimension while formulating and implementing social-sector programmes and in devolution of funds to states.

Inclusion of women 

The Economic Survey says that empowerment of women is needed to reap the benefits of the time bound demographic dividend. Greater inclusion of women involves not just a step up in the gender budget which has gone up from 2.79 per cent in 2005-06 to 5.83 per cent of the GBS in 2013-14, but also a greater share of women in the decision-making process.