experienced much higher than average growth in consumption. But as many of them rose up the distribution scale, others who did relatively worse took their place, with the net result that the difference in consumption between the bottom 40% in 2005 and the bottom 40% in 2012 was just about the same as the difference in average consumption for the whole population.

To put it differently, India has remained as unequal (or equal) in terms of per capita consumption in 2012 as it was in 2005, but with a lot of “churning” underneath in terms of households moving up and down relative to other households, and in poverty status. As Table 1 shows, nearly one‐third of all households in the IHDS panel changed poverty status from 2005 to 2012, which includes 27 percent who moved out of poverty and 7 percent who moved into poverty.

The IHDS panel also shows that **Table 1: Movements out of poverty exceed shifts into poverty** movements out of poverty dominated movements into poverty: 69 percent of <mark>2012</mark> _% of Households_ households who were poor in 2005 <mark>Poor</mark> Non‐poor moved out of poverty in 2012, and only Poor 12.2 26.8 11 percent of non‐poor households in 2005 2005 fell into poverty in 2012. This is Non‐poor 7.0 54.0 not surprising, given the high rate of _Source:_ Authors’ estimates using IHDS panel (2005, 2012) consumption growth among the (anonymous) bottom 40%, which caused the overall distribution to shift rightwards significantly, lifting all (or most) boats in the process.

A high degree of “churning” amid upward mobility is also observed in synthetic panels constructed from three rounds of NSS data over the period 2005‐2012 (Dang & Lanjouw, 2015a).<sup>7</sup> Their analysis classifies the population into the poor, the vulnerable and the middle‐class (those who are neither poor nor vulnerable), where the vulnerable population are defined as those with consumption above the poverty line and below a “vulnerability line” (VL) that corresponds to a 20 percent probability of falling into poverty.<sup>8</sup> This yields a VL that is about 72 percent higher than the national poverty line – slightly lower than an alternative VL equivalent to twice the poverty line, which has been used in past work by the World Bank in India as a threshold for vulnerability.<sup>9</sup> Figure 5a shows that 52 percent of the population changed status from 2005 to 2012, using the lower VL. As in the IHDS panel, upward mobility (35 percent of the population) is much more common 7 See Dang & Lanjouw (2013, 2014) for a detailed discussion of the methodology of measuring poverty dynamics with synthetic panels and its application to define vulnerability lines in different countries.

8 The vulnerability line (VL) corresponds to a vulnerability index (VI) of 0.2, which is the probability of an individual being poor in 2012 given s/he is non‐poor in 2005. VL is thus a welfare threshold such that an individual with consumption below this level in 2005 has a greater than 20 percent probability of being poor in 2012.

9 The Country Partnership Strategy (2013‐17) for India (World Bank, 2013), uses twice the poverty line as the vulnerability threshold. It is associated with a vulnerability index of around 0.18, which implies that an individual with consumption below this threshold in 2005 has 18 percent or higher probability of being poor in 2012. Thus the seemingly arbitrary standard of twice the poverty line is associated with an estimated risk of becoming poor that is close to the 20 percent risk threshold often used to define vulnerability lines in recent research.

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