Poverty in India

India's poverty rate was below 5% in 2023-24 , according to an SBI study . Government data from the 2023-24 Household Consumer Expenditure Survey (HCES):

  • Rural poverty declined from 7.2% (2022-23) to 4.9% .
  • Urban poverty declined from 4.6% (2022-23) to 4.1% .

Poverty at the national level dropped 17.2 percentage points from 2011-12 to 2023-24 (from 21.5% in 2011-12 to below 5% in 2023-24 ).

Evolution of Poverty Estimation in India

  • Early estimates based on calorie intake norms (Dandekar & Rath, 1960s). Planning Commission adopted this method with modifications.
  • Mismatch between National Sample Survey (NSS) consumption expenditure and national accounts statistics led to methodology reviews.

Key committees

  • Suresh Tendulkar Committee (2009):
    • Shifted focus from calorie intake to overall expenditure basket .
    • Used Mixed Reference Period (MRP) to measure poverty.
  • C. Rangarajan Committee (2014) (not officially accepted):
    • Defined food basket based on calorie, protein, and fat norms.
    • Included median non-food expenses (clothing, rent, transport, education).
Poverty in India

Methodological Issues in Recent Poverty Estimates

  • 2017-18 HCES survey was withheld for "data quality issues," leading to reliance on alternative datasets (PLFS, CMIE, National Accounts Data) .
  • 2022-23 & 2023-24 HCES Surveys: Key Changes
    • Modified Mixed Reference Period (MMRP):
      • Food expenses recorded for 1 week .
      • Regular expenses recorded for 1 month .
      • Long-term expenses recorded for 1 year .
    • Multiple household visits (3 times instead of 1) improved accuracy but reduced comparability with older surveys.
    • Inclusion of free government-provided items (laptops, mobile phones, bicycles, school uniforms, food).
  • SBI's methodology (2023-24)
    • Used inflation-adjusted poverty lines based on 2011-12 MRP poverty estimates (₹816 rural, ₹1,000 urban).
    • Ignored higher household expenditure estimates from MMRP , which may underestimate poverty .

Urban-Rural Poverty Gap & Census Issues

  • Rural-urban poverty gap narrowed due to:
    • Same urban classification since 2011 , without updating for newly urbanized areas.
    • Exclusion of potential "census towns" from urban category , possibly underestimating rural poverty.

The "Great Indian Poverty Debate" Continues

  • New methodologies improve poverty measurement accuracy but make comparisons with older estimates difficult .
  • Poverty estimates remain contentious due to changes in survey methodology, raising questions on actual decline rates .
  • Debate continues on whether poverty has truly reduced or is just being measured differently .