India’s extreme poverty now at minimal stage, overall poverty rate drops below 5% in 2024: SBI Research 

A research study by State Bank of India (SBI) highlighted that the extreme poverty in the country has reduced to minimal with poverty rates in the country falling below 5 percent in 2024. 

The Consumption Expenditure Survey found a remarkable decline in rural poverty estimated at 4.86 percent in FY24 (7.2 percent in FY23 and 25.7 percent in FY12), while urban poverty is estimated at 4.09 percent (4.6 percent in FY23 & 13.7 percent in 2011-12), the report said. 

“At an aggregate level, we believe poverty rates in India could now be in the range of 4-4.5 per cent with almost minimal existence of extreme poverty,” it said. 

The report also highlighted significant improvements in rural and urban poverty levels over the years, supported by data from the government’s Consumption Expenditure Survey. 

Recently Prime Minister Narendra Modi had also said that over 23 crore people have come out of poverty in last ten years. 

The poverty estimates may undergo minor revisions if the 2021 census is done and updated rural-urban population data is published, the report noted.  

SBI Research believes that urban poverty levels could decline even further in the coming years. 

“It is possible that these numbers could undergo minor revisions once the 2021 census is completed and new Rural Urban population share is published. We believe Urban poverty could decline even further,” it said. 

The difference between rural and urban monthly per capita consumption expenditure/MPCE to rural MPCE is now at 69.7 percent, a rapid decline from 88.2 percent in 2009-10…mostly due to the initiatives the Government has taken in terms of DBT transfers, building Rural infrastructures, augmenting farmer’s income, improving the rural livelihood significantly, as per the report. 

Remarkably, states that were once considered laggards such as Bihar, Rajasthan are showing the maximum improvement in rural and urban gap, it added. 

The methodology for these estimates starts with 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 stands at Rs 1,632 for rural areas and Rs 1,944 for urban areas. 

Using this adjusted poverty line and fractile distribution data, the proportion of poverty in rural areas is calculated at 4.86 percent and in urban areas at 4.09 percent for FY24. 

The report attributed the decline in rural poverty to higher consumption growth among the bottom 5 percent of the population, leading to a shift in the poverty line. 

In FY23, the poverty line fell within the 5-10 percent decile, but by FY24, it had shifted to the 0-5 percent decile, indicating better economic conditions for the poorest segments of the population. 

This sharp reduction in poverty levels shows country’s progress in improving living standards and addressing inequality. With continued economic growth and targeted policies, the country appears poised to achieve even greater reductions in poverty, particularly in urban areas.