Is India’s poverty rate 5% or 24%?

Source: The post “Is India’s poverty rate 5% or 24%?” has been created, based on “Is India’s poverty rate 5% or 24%?” published in “BusinessLine” on  11th March 2026.

UPSC Syllabus: GS Paper-3- Economy

Context: Recent debates suggest that India’s poverty rate could be around 5% or 24%, depending on the poverty line used. According to the World Bank, extreme poverty in India declined significantly, but a large share of the population remains economically vulnerable.

Extreme Poverty Estimates

1. The World Bank measures extreme poverty at $3.00 per person per day (2021 PPP).
2. Using this threshold, India’s extreme poverty declined from about 27% in 2011-12 to 5.3% in 2022-23.
3. Nearly 270 million people moved above this threshold, reflecting major progress in reducing extreme deprivation.
4. However, this benchmark mainly captures bare survival levels of income rather than economic security.

Poverty in Lower-Middle-Income Context

1. For lower-middle-income countries, the World Bank recommends a higher poverty line of $4.20 per day.
2. At this level, 23.9% of India’s population (around 342 million people) were poor in 2022-23.
3. This group includes households that have escaped extreme poverty but remain economically vulnerable to shocks such as inflation, job loss, health emergencies, or climate risks.

Government’s Approach to Poverty Measurement

1. Government responses in Parliament have largely relied on the National Multidimensional Poverty Index (MPI).
2. The MPI measures deprivation across sectors such as health, education, housing, sanitation, and basic services.
3. The methodology is supported by the Oxford Poverty and Human Development Initiative.
4. However, MPI was designed to complement monetary poverty measures, not replace them.

Limitations and Methodological Issues

1. Relying solely on MPI avoids the key question of what income level defines poverty in India today.
2. Recent poverty estimates also reflect methodological changes in the Household Consumption Expenditure Survey, including the Modified Mixed Reference Period, which shortens recall periods and may increase measured consumption levels.
3. The Global MPI 2024 estimates that 16.4% (233.6 million people) are multidimensionally poor, while an additional 18.7% (266.3 million people) are vulnerable to falling into multidimensional poverty.
4. Selective focus on headline reductions may overlook households just above the poverty threshold.

Way Forward

1. India should update its monetary poverty line to reflect current prices and consumption patterns.
2. A dashboard approach combining income-based poverty, multidimensional poverty, and vulnerability indicators should be adopted.
3. Greater transparency in poverty estimation methods and survey changes is necessary.
4. Clear poverty benchmarks are essential for designing welfare programmes, minimum wages, and targeted subsidies.

Conclusion: India has made significant progress in reducing extreme poverty, but a large population remains economically vulnerable. A comprehensive and transparent poverty measurement framework is necessary to ensure effective policymaking and democratic accountability.

Question: Debates over India’s poverty rate often arise due to different poverty lines and measurement approaches. Examine the difference between extreme poverty and economic vulnerability in India and discuss the need for a comprehensive poverty measurement framework.

Source: BusinessLine