680 million Indians lack the means to meet their essential needs: report

February 20, 2014 

Rukmini S

The HinduA homeless man in Coimbatore. In a new research report released on Wednesday, McKinsey Global Institute said that 680 million Indians, or 56 per cent of the population, lacks the means to meet their essential needs. File photo: K. Ananthan 

Proposing a new “empowerment line” that aims to measure the minimum economic cost for a household to fulfil eight most basic needs, a global research organisation has estimated that 680 million Indians, or 56 per cent of the population, lacks the means to meet their essential needs.Health care, drinking water and sanitation between them account for nearly 40 per cent of the gap between their current status and the ‘empowerment line.In a new research report released on Wednesday, McKinsey Global Institute (MGI), the research arm of the consulting firm, created the new line by estimating the economic cost per capita to meet a minimum requirement of consumption of eight basic services — food, health care, education, sanitation, water, housing, fuel, and social security — and “others’ that included entertainment and clothing.Using sector-specific norms for each parameter, this worked out to an average Rs. 1,544 per capita per month. MGI then estimated the value of government services reaching the household at Rs. 208 per capita per month. Adjusting for the State-delivered goods and services, the ‘empowerment line’ was set at Rs. 1,336 per month. In 2011-12, this left 56 per cent of the country below this line, nearly 1.5 times the number of people that India’s official poverty line classifies as poor.

The line was set 38 per cent higher for urban India than for rural India. Based on this benchmark, 171 million urban residents (or 44 per cent of the urban population) were below the line, compared with 509 million rural residents (or 61 per cent of the rural population), the report said.

“Every poverty line has its problems, and we are aware that there will be problems with this line too, Shirish Sankhe, director at McKinsey and co-author of the report, told The Hindu.The additional consumption required to bring these 680 million above the line worked out to 4 per cent of GDP, the report said.

Deprivation score

Using census data, MGI also estimated the availability of basic services at the district level by compiling an Access Deprivation Score. Bihar had the highest level of deprivation with an ADS score of 62 per cent (the average resident lacked access to 62 per cent of services) followed by Uttar Pradesh, Jharkhand, Madhya Pradesh and Assam. Himachal Pradesh had the lowest access deprivation at 28 per cent followed by Punjab, Uttarakhand, Kerala and Tamil Nadu among the big States.