Demystifying the popular myth that Nepal is the poorest country in the South Asia, the recent World Bank report revealed that it is the third poorest country in the region.
"From being the poorest country in 1990, Nepal has improved its position to be the third poorest behind Bangladesh and India in South Asia," according to the World Bank global poverty estimates that monitors trends and progress toward achieving Millennium Development Goals (MDGs).
Nepal moved ahead of Bangladesh in 1999 and India in 2008, it said, adding that the country has achieved MDG-1 — several years ahead of 2015 — percentage reduction in extreme poverty line of $1.25 purchasing power parity (PPP).
Within the South Asia Region, Bangladesh is the poorest country in the region, with 46.6 per cent of its population living under $1.25 a day, according to the report. "India has 37.4 per cent extreme poor, and with 33.9 per cent Nepal becomes the third poorest, whereas Pakistan has 21 per cent, Bhutan has 9.3 per cent and Sri Lanka has 5.6 per cent of the population living under extreme poverty line of $1.25 per day," it added.
Though South Asia has progressed in addressing the extreme poor, the region is still home to most of the developing world’s poor as about 571 million people — accounting for more than 44 per cent of the developing world’s poor — survive on less than $1.25-a-day.
The international poverty line is used to track MDG 1 — Eradicate Extreme Poverty and Hunger — that sets the objective of halving the proportion of people living with less than $1.25-a-day between 1990 and 2015.
The new internationally comparable poverty line estimate using $1.25 per-capita per day poverty line is very close to the new poverty estimate of 25.2 per cent using national poverty line closing the gap between the national and international poverty lines. The estimates of percentage of poor for 2010-11 almost coincides in 2010-11 at around 25 per cent by using either the new national poverty line of Rs 19,261 per capita per year or international poverty line of $1.25 (2005) PPP, the report said.
However, with the higher $2-PPP per-capita per day, poverty fell only by a quarter to 57.3 per cent, said the World Bank that has since the 90s started producing global poverty estimates.
In order to guarantee the consistency of estimates across countries, poverty is assessed using a common yardstick — the international poverty line — which is currently set at $1.25 per capita per day.
Moreover, to account for differences in the cost of living, the international poverty line is converted to each country’s local currency using purchasing power parity (PPP). The international poverty line is used to track Millennium Development Goal number 1, 'Eradicate Extreme Poverty and Hunger,' which sets the objective of halving the proportion of people living with less than $1.25-a-day between 1990 and 2015.
The recent World Bank global poverty estimates update has assessed poverty using two internationally comparable poverty lines — $1.25 and $2 per capita per day. Both international poverty lines are converted to local currency using the latest 2005 Purchasing Power Parity exchange rates.
South Asia made substantial progress in poverty reduction. Despite high population growth rates, about 46 million people moved out of poverty and regional poverty rate decreased from 53.8 per cent to 36 per cent between 1990 and 2008. The trend in poverty reduction in the South Asia Region is on par with the global trend.
Extreme poverty rates
Bangladesh — 46.6 per cent
India — 37.4 per cent
Nepal — 33.9 per cent
Pakistan — 21 per cent
Bhutan — 9.3 per cent
Sri Lanka — 5.6 per cent
(Source: PovcalNet, World Bank. Estimated $1.25-a-day poverty rates for the 2008 reference year. Poverty rate for Afghanistan and Maldives could not be calculated due to the lack of PPP data to adjust for cost of living and sufficient data.)