Extreme poverty in India reaches lowest level: SBI Research
New Delhi: Poverty rate in the country is projected to fall below 5 per cent in 2024, a research study by the State Bank of India (SBI) has also highlighted that extreme poverty has reduced in the country. It said “At the overall level, we believe the poverty rate in India may now be in the range of 4-4.5 per cent, with the existence of extreme poverty almost minimal”. The report also highlighted significant improvement in rural and urban poverty levels over the years, which has been supported by data from the government’s consumption expenditure survey.
According to the survey, rural poverty is estimated to be 4.86 per cent in FY24, down significantly from 7.2 per cent in FY23 and 25.7 per cent in FY20. Similarly, urban poverty is projected to decline to 4.09 per cent in FY24 from 4.6 per cent in FY23 and 13.7 per cent in FY12. Recently, Prime Minister Narendra Modi also said that more than 23 crore people have come out of poverty in the last ten years. If the 2021 census is conducted and updated data of rural-urban population is published, there may be minor revisions in poverty estimates. However, SBI Research believes that urban poverty levels may decline even further in the coming years. It said, “It is possible that these numbers may undergo minor revisions after the 2021 Census is completed and new shares of rural-urban population are published. We believe urban poverty may decline even further”. The methodology for these estimates starts from the poverty line defined in 2011-12, adjusted for decadal inflation and an imputation factor derived from National Sample Survey Office (NSSO) data. The new poverty line for 2023-24 is Rs 1,632 for rural areas and Rs 1,944 for urban areas.
Using this adjusted poverty line and differential distribution data, the poverty headcount ratio in rural areas is pegged at 4.86 per cent for FY24 and 4.09 per cent in urban areas.The report attributes the reduction in rural poverty to higher consumption growth among the bottom 5 per cent of the population, leading to a shift in the poverty line.The poverty line had fallen to within the 5-10 per cent decimal place in FY23, but by FY24 it has fallen to within the 0-5 per cent decimal place, indicating improved economic conditions for the poorest segment of the population.This sharp reduction in poverty levels reflects the country’s progress in improving living standards and addressing inequality. With continued economic growth and targeted policies, the country is poised to achieve even greater reduction in poverty, especially in urban areas.
