India’s Poverty Levels See Sharp Decline

Context:

India has made significant progress in reducing absolute poverty over the last two decades. However, the absence of updated official poverty estimates continues to hinder accurate measurement and policy targeting.

Key Points:

• Decline in Extreme Poverty (Based on World Bank Thresholds):
  • Under $3/day (new low-income line):
    • Down from 27.1% in 2011–12 to 5.3% in 2023–24
  • Under $4.20/day (for lower middle-income countries):
    • Down from 57.7% to 23.9% over the same period
• World Bank Poverty Line Revisions:
  • The World Bank has updated its thresholds in 2022:
    • From $2.15 to $3.00 for low-income nations
    • From $3.65 to $4.20 for lower middle-income countries like India
  • This offers a new basis to evaluate India’s poverty trajectory

Contributing Factors to Poverty Reduction:

• Sustained economic growth
• Targeted welfare and poverty alleviation programs
• A reformist consensus on inclusive development strategies

Challenges and Gaps:

• Urban-Rural Disparities:
  • Poverty remains significantly higher in rural areas
  • Differences may be overstated due to price-level variations, needing clarification via consumer surveys
• Data Limitations and Policy Needs:
  • India’s last official poverty estimate was nearly a decade ago
  • Despite two recent household consumption surveys, the government has not produced updated poverty statistics
  • There’s an urgent need for a revised poverty line tailored to India’s current socioeconomic reality
• Fragility of Poverty Gains:
  • Lessons from the pandemic underscore that many who escaped poverty remain vulnerable to economic shocks
  • The “last mile” in poverty elimination is the hardest, requiring precise targeting

Policy Considerations:

• Avoid overstating success (triumphalism); instead, build on gains with accurate data
• Evaluate how schemes like free food provision align with actual poverty numbers
• Rely on domestic, evidence-based poverty estimates rather than international proxies

BS