Poverty rate in India between 4.5-5% in 2022-23; rural poverty at 7.2%: SBI

India's headline poverty rate stood between 4.5 and 5 per cent in 2022-23, a recent study released by the State Bank of India (SBI) on Tuesday showed.
 

The study by the government-run bank, which is based on the latest Household Consumption Survey (HCES), showed that rural poverty declined to 7.2 per cent in 2022-23 from 25.7 per cent in 2011-12. Meanwhile, urban poverty declined to 4.6 per cent from 13.7 per cent during the same period.

"Rural poverty has thus staged a significant 440-basis point decline since 2018-19 and urban poverty a 170-basis point decline post-pandemic. This indicates that many government programmes currently for those at the bottom of the pyramid are having a significant salutary impact on rural livelihood," the report noted.

The SBI report estimated the new poverty line at Rs 1,622 for rural areas and Rs 1,929 for urban areas, based on the recommendations of an expert group headed by Suresh Tendulkar, which had estimated a poverty line of Rs 816 for rural and Rs 1,000 for urban areas in the year 2011-12.

"Starting with the 2011-12 poverty line estimate of Rs 816 in rural areas and Rs 1,000 in urban areas, the new poverty line was adjusted for decadal inflation and imputation factor derived from the NSSO report," SBI pointed out in its report.

Earlier, a World Bank paper had shown that India's poverty rate had declined to 11.6 per cent for rural areas and 6.3 per cent for urban areas in 2018-19.

The latest HCES results, which were released after over a decade on Saturday, indicated the gap between rural and urban consumption narrowing and spending inequality among the poorest and richest households shrinking.

"Enhanced loops of physical infrastructure are scripting a new story in two-way rural-urban mobility, one of the prime vectors for the incrementally shrinking horizontal income gap between rural and urban landscapes and the vertical income gap within rural income classes," the SBI report said.

Further, the report also noted that India is becoming more aspirational, as indicated by the increasing share of discretionary consumption (spending on beverages, intoxicants, entertainment, durable goods, etc.) in both rural and urban areas, with the speed of aspiration being faster in rural areas as compared to urban areas.

The HCES has shown that the share of household spending on food declined below 50 per cent for the first time for rural areas in 2022-23. The share of spending on food in the urban consumption basket also stood at close to 40 per cent.

India has not had a revision to poverty line calculations since 2014, when another expert group chaired by former RBI Governor C Rangarajan had submitted its report, as several representations were made suggesting that the Tendulkar poverty line was too low.

The new poverty line, as calculated by the Rangarajan committee, thus worked out to a monthly per capita consumption expenditure of Rs 972 in rural areas and Rs 1,407 in urban areas in 2011-12.