New research suggests that the extreme poverty rate in India has dropped to ‘negligible’ levels, with rates below 5% in 2024, with rural poverty at 4.86% and urban at 4.09% as per recent reports.
The notion that development in populous, low-income countries is inherently slow seems to be wrong if we look at the recent reporting. It was and still is often cited due to the complexities of scaling interventions and the scale of poverty.
Let’s have a look into the findings, and keep in mind there are debates around the measurement of poverty.
Current Poverty Rate Levels in India
Recent data from the State Bank of India (SBI) report, based on the 2023-24 Household Consumption Expenditure Survey (HCES), estimates that the national poverty rate has fallen below 5%, specifically between 4-4.5%. This is broken down as follows:
| Region | FY24 Poverty Rate (%) | FY23 Poverty Rate (%) | FY12 Poverty Rate (%) |
|---|---|---|---|
| Rural | 4.86 | 7.2 | 25.7 |
| Urban | 4.09 | 4.6 | 13.7 |
These figures do indeed represent a sharp decline, with rural poverty dropping from 25.7% in FY12 to 4.86% in FY24, and urban poverty decreasing from 13.7% in FY12 to 4.09% in FY24. The poverty line for 2023-24 was set at Rs1,632 for rural areas and Rs1,944 for urban areas, adjusted for inflation based on the recommendations of the Suresh Tendulkar committee from 2011-12.
Further, a Brookings article provides additional insight using international poverty lines, noting that the Headcount Poverty Ratio (HCR) for the PPP$ 1.9 poverty line (a common measure of extreme poverty) declined from 12.2% in 2011-12 to 2% in 2022-23, equating to an annual reduction of 0.93 percentage points. For the PPP$ 3.2 poverty line, the HCR dropped from 53.6% to 20.8% over the same period, as shown in the table below:
| Poverty Line | 2011-12 HCR (%) | 2022-23 HCR (%) | Annual Reduction (ppt) |
|---|---|---|---|
| PPP$ 1.9 | 12.2 | 2 | 0.93 |
| PPP$ 3.2 | 53.6 | 20.8 | ~3 |
These statistics show the near elimination of extreme poverty in India, with the 2% HCR for PPP$ 1.9 in 2022-23 being particularly striking, suggesting that only a small fraction of the population remains below this threshold.
Poverty Rate in India – Historical Trends and Comparisons
Historical data regarding extreme poverty rate in India provides context for this decline. According to Forbes India, using World Bank data and the $2.15 poverty line, India’s extreme poverty rate has decreased steadily over the years, as shown in the following table:
| Year | Poverty Rate in India (percent) |
|---|---|
| 1977 | 63.11 |
| 1983 | 56.26 |
| 1987 | 50.59 |
| 1993 | 47.64 |
| 2004 | 39.91 |
| 2009 | 32.87 |
| 2011 | 22.53 |
| 2015 | 18.73 |
| 2017 | 13.37 |
| 2018 | 11.09 |
| 2019 | 12.73 |
| 2020 | 14.72 |
| 2021 | 11.9 |
This historical perspective shows a consistent downward trend, with the most recent figures aligning with the near eradication of extreme poverty rate in India as reported by SBI and Brookings.
Policy and Economic Drivers
The decline in poverty rates is attributed to several factors, including higher consumption growth among the bottom 5% of the population, as noted in the SBI report. This growth is partly due to large government support, with programs like the Ayushman Bharat Yojana for affordable healthcare and the Pradhan Mantri Bharatiya Janaushadhi Pariyojana contributing to improved living conditions. Additionally, public initiatives such as the national mission for toilet construction, universal access to electricity, modern cooking fuel, and piped water have played a role. For instance, rural access to piped water increased from 16.8% as of August 15, 2019, to 74.7% currently, potentially reducing sickness and boosting family incomes.
An unexpected detail is the impact of free food programs, not accounted for in official poverty statistics. The Brookings article notes that approximately two-thirds of the population receive free wheat and rice, which likely further reduces effective poverty rates by enhancing food security. Real per capita consumption growth since 2011-12 has been 2.9% per annum, with rural growth at 3.1% and urban at 2.6%, accompanied by declining inequality, as evidenced by the Gini coefficient dropping from 36.7 to 31.9 in urban areas and from 28.7 to 27.0 in rural areas.
Debates around the Measurement of Poverty
There are debates around the measurement of poverty. The India Forum for instance notes that until unit-level data from the 2022-23 NSO survey is analyzed, announcements of extreme poverty rate in India elimination should be cautious.
This is also discussed in the below podcast.
Additionally, the proximity to national elections has politicized the debate, with some questioning the timing and methodology of recent surveys. Nevertheless, there seems to be a consistency across multiple sources, including government reports and international analyses, lending credibility to the overall trend.
