India, with the world\'s largest population of poor people, also paradoxically c
ID: 1224442 • Letter: I
Question
India, with the world's largest population of poor people, also paradoxically creates millionaires at the fastest pace in the world. Millionaires increased by 22.7 percent to 123,000. In contrast, the number of Indians living on less than a dollar a day is 350 million and those living on less than $2 a day is 700 million. In other words, there are 7,000 very poor Indians for every millionaire. [Source: The Times of India, June 25, 2008] Why might incomes of $1 a day and $2 a day underestimate the value of what is being consumed by these households?
Explanation / Answer
Household’s incomes of $1 a day and $2 a day is understated because of the possibility that these people grow and consume their own food, produce clothing and make shelter for themselves. As a result if the value of their goods and services are not included then their share gets understated. On other hand, including them raises the value of the goods and services.