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Context:
The World Bank revised the global poverty line to $3/day (PPP 2021) from $2.15/day (PPP 2017).
Key Findings:
Sharp Decline in Poverty (2011–2023)
- Extreme Poverty Rate fell from 27.1% in 2011–12 to 5.3% in 2022–23, based on the revised $3/day threshold.
- Earlier estimate (using $2.15/day benchmark) had pegged poverty at 2.3% in 2022–23.
- Lower-Middle Income Poverty Line saw a 33.7 percentage point decline over the same period.
Why This Matters
- The adjustment reflects changes in purchasing power parity (PPP) and global inflation.
- Even after accounting for inflation, $2.15 is a real increase in the poverty threshold.
- More people globally will now be classified as living in extreme poverty, as they fall below this new standard.
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Revised Poverty Benchmark
- The World Bank updated its extreme poverty line to $3/day, adjusted for 2021 purchasing power parity (PPP).
- This represents a 15% higher threshold compared to the previous $2.15/day line (2021 PPP).
- The revision accounts for inflation in developing countries, particularly India’s inflation trends between 2017–2021.
India’s Poverty Rate in 2024
- At the $3/day threshold:
- Poverty Rate: 5.44% of the population
- Absolute Numbers: 54.7 million people lived on less than $3/day in 2024.
Trend Summary (Poverty Reduction in India)
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| Year | Metric | Poverty Rate (%) | Benchmark Line |
|---|---|---|---|
| 2011–12 | Extreme Poverty | 27.1 | $2.15/day |
| 2011–12 | Lower-Middle Income Poverty | ~39.7 (est.) | $3.65/day |
| 2022–23 | Extreme Poverty | 2.3 | $2.15/day |
| 2022–23 | Extreme Poverty | 5.3 | $3/day (revised) |
| 2024 | Population under $3/day | 5.44 | $3/day (PPP-adjusted) |
What is Poverty Line?
The poverty line represents the minimum income level needed to meet basic needs like food, shelter, and clothing. It’s a benchmark used to identify individuals and households struggling to afford these necessities and are thus eligible for government assistance.
- Definition:
- The poverty line is a monetary threshold below which an individual or family is considered to be living in poverty.
- Purpose:
- It helps governments understand the extent of poverty and identify those who need support.
- Measurement:
- Different countries and regions may have different methods for calculating the poverty line, often considering factors like the cost of food, housing, and other essential items.
Implications and Insights
- Poverty Alleviation Progress: India has achieved a substantial decline in poverty across all global benchmarks, reflecting improved access to basic services, economic mobility, and rural development.
- Revised Standards: The $3/day benchmark offers a more realistic picture of poverty in the Global South, better aligned with rising living costs.
- Policy Focus Areas:
- Sustained inflation control,
- Rural employment,
- Social safety nets (e.g., PDS, MGNREGA),
- Access to education and healthcare remain critical to maintaining the pace of poverty reduction.
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