Mint Primer: How to read SBI’s latest poverty estimates
Subscribe to enjoy similar stories. A recent report by the State Bank of India has stirred up the proverbial hornet’s nest with its claims of a sharp reduction in poverty levels in India, particularly rural areas, in the past decade. It has led to a flurry of counter-claims, with economists questioning the methodology used to arrive at the findings.
Mint explains what the matter is about. A brief factsheet of the latest annual Household Consumption Expenditure Survey (HCES), held in August 2023-July 2024, was released in late December. Based on that, the SBI report says the poverty ratio in rural areas declined to 4.86% in the period (i.e.
4.86% of rural Indians are below the poverty line), down from 25.7% in 2011-12, whereas in urban areas, it fell to 4.09% from 13.7%, indicating that rural poverty has fallen faster. This puts all-India poverty levels somewhere between 4% and 4.5%, with prevalence of extreme poverty “almost minimal", the report claims. The report attributes this decline to government initiatives in rural India such as direct cash transfers and investment in physical infrastructure, which, it said, have improved consumption growth in the bottom 5% of the population.
The most commonly used method to estimate poverty in India is through measuring consumption levels. If a household’s consumption is below a minimum monetary threshold, it is seen as being ‘below poverty line’. Data is captured through Household Consumption Expenditure Surveys (HCES), which gather information on households’ expenditure on goods and services.
Read more on livemint.com
