ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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What Are These New Poverty Estimates and What Do They Imply?

The World Bank's recent estimates of poverty in the developing world have led to an upward revision of the number of poor in the world by 400 million. These adjustments are made on the basis of the revision in purchasing power parity estimates as part of the International Comparison Program exercise. Using the same ICP exercise, the Asian Development Bank claims an even higher estimate of the poor in Asia. A proper examination of the underlying database and the methodology for estimating poverty across countries suggests that though these estimates are better than the earlier ones, the assumptions behind the adjustments and the quality of data obtained from the ICP limit the usefulness of such an exercise for cross-country poverty comparisons. For India, both these estimates suggest severe underestimation in the official numbers on poverty.

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