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Good news

The World Bank has systematically measured national and global poverty rates since 1990. In its latest estimates, the poverty line measured in purchasing power parity dollars has been increased to $1.90 from $1.25, and globally the number of people living below the poverty line has fallen to 9.6 per cent. This is the first time since these measures began that the rate has fallen to below 10 per cent. The distribution of poor people is concentrated in Sub-Saharan Africa, in the conflict-ridden states of Africa, and South Asia. The trend is declining, mainly because of the growth of the Indian economy. However, the drop in poverty rates in these parts of the world has been quite small, and the rates have increased marginally in Latin America, the Caribbean, Central Asia and Europe. This still means that a large absolute number of 702 million people live below the poverty line. However, it is significantly less than 1.9 billion people estimated to be living below the poverty line in 1990. The PPP measure helps to correct for differences in prices across different economies. So, when domestic prices change compared to the US dollar, the PPP measure is revised. The real purchasing power of the new $1.90 is supposed to be very close to the earlier poverty line of $1.25. The result is good news, and since this measure is adopted by policy-makers in multilateral institutions it will give encouragement to organizations like the UN with targets like the millennium development goals.

The objective of the UN is to eradicate absolute poverty by 2030, which, given the experience of the recent past, appears to be possible. It does depend on economic growth and the creation of human capabilities like education and health. It requires a combination of market efficiency and fiscal responsibility, created by private investment and good governance, not easily available in national economies. Also, the measure of poverty is one of income poverty. Deprivations can be of many other kinds too, making income adequacy only one of many targets that people aspire for. There are issues of freedom, security, dignity and empowerment that contribute significantly to the making of a good life. It is in this sense that a set of equally important goals like the recently announced sustainable development goals are more comprehensive. It is also a reflection of the fact that actual poverty continues to be well above the rate measured by income deficiencies alone.

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