Comparative Analysis of Poverty: India vs. China

Date: Sep 24, 2020

Introduction

China is already a superpower while India, on the other hand, is on many economic forums deemed to be an economic powerhouse. Despite the good standing of the overall economy, it is worrying that the poverty levels experienced in both countries are still high when compared to other nations of similar status. That is one of the reasons why these two countries were selected for this study. China and India are also economic powerhouses in the Asian region. What happens in these two economies largely affects the happening in other countries in that region it is, therefore, to investigate some of the social factors the two countries. The two countries also have the largest populations in the globe, and it would be interesting to know whether the high population could be a contributing factor to the noted levels of poverty.

This paper seeks to compare these factors and see if they contribute to the extreme levels of poverty witnessed in the two countries. Poverty is a social problem, and it is particularly the case where the gap between the rich and the poor is wide. Using measures such as the GDP can sometimes be misleading as it hides certain economic injustices. When looked at from the wider picture, an economy can seem to be doing well. However when a closer analysis is done, one will realize that most of a nation’s wealth are contained in the hands of only a few individual while the rest languish in economic difficulties. This is the case in China and India which merits this study. This paper will, therefore, examine compare the poverty India and China noting the extent in both countries as well as efforts taken to mitigate it. 

 

Extent of Poverty in China and India

As it has been noted above, China and India are making important strides in the economic front. However, whether the growth witnessed in both countries translates into poverty reduction is debatable. The World Bank’s threshold poverty threshold is US$1.25 a day. Thus, any individual surviving on less that that figure on a daily basis is deemed to be poor. Globally, the bank estimated that the number of people living below that threshold stood at 900 million or 15% of the total population of the human race. This is impressive considering that in 1990, around 42% of the individuals inhabiting the earth were considered poor. However, the US$1.25 represents those in extreme poverty. There are many people who survive on slightly more than that but are considered to be poor. The standard by the world bank is thus debatable. That notwithstanding, China and India account for a good number of the 900 million individuals living below the World Bank’s mark owing to their populous nature.  Poverty measures have always been controversial as there is no general agreement on which concept and methodology that can be used to demarcate the poverty boundaries. 

India’s Poverty Line

India’s Planning Commission in 2011 presented estimates that set the threshold of the nation’s poverty lines in both urban and rural areas. For the urban areas, the threshold was determined to be 965 Rupees while for the rural areas it was determined to be 781 rupees per month. That translates to about 26 and 32 rupees for two regions respectively. Prior to this recommendation by the planning commission which factored in rural-urban price differentials, poverty estimates were based on per capita consumption that yielded a specific level of appropriate caloric intake. For rural areas, the recommended caloric intake per day was 2400 kilocalories per capita per day while for urban areas the figure stood at 2100. According to that method, the proportion of the population deemed to be poor was 28% but when the method changed in 2011, the figure rose by 12 percentage points to 42%. Accordingly the number of Indians living below standard poverty line is almost 327 million individuals. 

China’s Poverty Line

Unlike India, China has been relatively straight forward in their calculation of poverty indices.  In the early 1980’s, 45 percent of the urban population lived below the World Bank’s threshold while 94% of the rural population were deemed to live in extreme poverty. China has however made great strides in addressing this social problem since as at 2005, only 1.7% of those living in urban areas live on less than $US1.25 a day while the rural population experiencing this form of poverty was reduced to 26%. The 2005 total figure amounts to almost 207.7 million individuals from 835 million in 1980. According to Nino-Zarazua & Addison, the rate of decline in this figure has been so drastic that it exceeded the combined number of those still living in poverty in Africa (388 million) and Latin America (47.6 million). This figure implies that the reduction of poverty correlates with the increase in development. There is, however, some controversy regarding the manner which China has set its poverty line. Unlike India, which changed the manner in which poverty line is calculated, China has retained its traditional method which was based on a bundle of items that largely consists of food grains. Experts argue that this method is misleading as it has not been updated to reflect a change in the patterns of consumption or inflation in both food and other items.  As such the Chinese method of determining the poverty line is considered to be among the lowest among the developing countries. 

Irrespective of the controversies surrounding the methods used to establish the poverty lines, the rates of poverty in both countries is still too high in comparison with some of their developing counterparts in Europe and Asia. They still have more work to do especially regarding the factors that promote the extreme poverty levels. One of the aspects that warrant a closer look is their population level. China’s population currently stands at 1.357 billion while India’s population is 1.252 billion. Jointly both countries account for more than 40% of the globe’s 6 billion population. With such populations, both governments face a challenge in service delivery in critical sectors such as healthcare, education, and infrastructure.  Without these vital services, the citizens cannot be productive enough to raise decent standards of living.  Thus, the high population in both countries acts as a hindrance to the alleviation of poverty. China, however, seems to have taken steps to remedy this challenge as it recently adopted a one-child policy that restricts couples to only one child. The fruits of this policy are yet to be realized. 

Another challenge that is prevalent in both countries and other developed countries as well is the wide gap between the rich and the poor. As it has been noted above both countries are doing well on the economic front when popular economic measures are used estimate the extent of development. However, much of the witnessed growth is attributable to the wealthy individuals. These rich individuals control a huge chunk of the economy leaving the poor with only a small share.  The rich, own industries which make a lot of profits but they employ the economically disadvantaged individuals in these industries and pay them very little. In fact, some of them do not pay even the minimum wage, but the poor fellows continue to work because of desperation. Thus, while the rich continue to multiply their wealth, the poor persons languish in poverty. Both countries need to adopt pro-poor growth and development strategies to assist some of the impoverished individuals to get out of their situation. 

Another important factor that is common in both countries is elitism. Elitism is a class-distinction system where individuals are discriminated based on the socio-economic class to which they belong. The caste-system in India is widely responsible for the poverty in the rural areas. In this country, people are discriminated from pursuing certain professions such as trade just because of their tribe. The subordination of those considered to be low-class by the high caste individual’s causes poverty in the former group. China’s Hukou system classifies all the Chinese citizens as either urban or rural. This system was adopted with the aim of preventing large slums from forming around the major cities. The method prevents persons working in the urban areas but classified as rural from accessing vital government services such as education health care and even pension. A Chinese citizen is only eligible to receive aid from their local government. This discriminatory system has also to a great extent fuelled the poverty in the two countries. There are other minor factors that are specific to each country. In India, lack of employment opportunities, low agricultural productivity due to poor weather and immobility of labor are some of the most pressing factors. China, on the other hand, has challenges such as increased rural to urban migration, access to health care, and education gap contributes to the heightened poverty levels.  

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Efforts to Reduce Poverty

The high population presents a major challenge to both countries. As it has been outlined above, China has taken legislative steps to stem this population from further ballooning. If the one-child policy is strictly adhered to, the positive outcomes are likely to be witnessed in the coming years. India has also taken steps to counter the increasing population by promoting family planning methods among couples. The promotion of family planning has been intensified by both the government and non-governmental organizations using a variety of tools including education and intensive campaigns via the mainstream media. 

The government has boosted its efforts in addressing income inequalities. Previously the governments of both countries adopted socialist policies that imposed very low taxed on citizens. This means that much of the country’s wealth vested in the hands of the rich. However a shift from such economic policies has subjected the rich to more taxation, and a majority of these taxes are redistributed to the poor in the form of social programs. China has hastened to adopt such policies, and the effects are visible with the declined poverty rates indicated above. India has been a bit sluggish, but it is slowly transforming to adopt these policies.  The governments of both countries have also intensified efforts to create jobs for their youth and women. Both China and India have positioned themselves strategically as global markets to encourage foreign investors to set up industries in the countries. This strategy has worked since major American and European manufactures have wide bases in these zones and by extension have created employment for their citizens. 

Besides these market-based strategies, both countries have also strengthened the social protection regimes. In China, there exists a minimum living subsidy scheme known as Di Bao. The program started in 1997 to protect the urban poor who were disadvantaged by market-based reforms. It has extended to the rural areas to cover a combined total of 150 million people. The positive effect of this program is that it discourages rural to urban migration. India also has their social protection program known as National Rural Employment Guarantee Scheme. This Indian program guarantees unemployed citizens 100 days of paid employment annually to about 240 million individuals. It caters for a host individual considered to be disadvantaged in one way or another and is the largest social protection program in the world.