Why India needs a new method to count its poor
Mint looks at issues surrounding poverty measurement and the need for having a more modern model. Poverty is measured by first arriving at a poverty line, the minimum level of income required to buy bare minimum necessities and then identifying those who fall below it by looking at household consumption surveys. The poverty threshold varies from country to country according to people’s social and economic conditions.
However, the World Bank has an international benchmark—anyone living below $2.15 per day is considered to be in extreme poverty. Multidimensional poverty looks at health, education and standard of living across 12 indicators. It is more survey-based and not on actual consumption.
According to a recent study by State Bank of India (SBI), the country’s headline poverty rate (the share of people who fall below the poverty line) in 2022-23 stood at 4.5% to 5%. The rural poverty rate was 7.2% (it was 25.7% in 2011-12) and the urban poverty rate was 4.6% (it was 18.7% in 2022-23). The SBI study arrived at these figures by taking the Tendulkar Committee’s poverty line of 2011-12 and imputing inflation over the past decade to it.
The new poverty line was ₹1,622 per month for rural areas and ₹1,929 for urban. It then applied the latest Household Consumption Expenditure Survey (HCES) 2022-23 to it. A Niti Aayog study has revealed that 248 million people have escaped multidimensional poverty in the past nine years.
It also said that the poverty headcount ratio declined from 29.17% in 2013 to 11.28% in 2022-23. Uttar Pradesh showed the biggest decline followed by Bihar, MP and Rajasthan. India may halve multidimensional poverty by 2030.
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