India must redefine poverty amid rising incomes and challenges

Source: The post India must redefine poverty amid rising incomes and challenges has been created, based on the article “Let’s redefine our poverty line to reflect India’s economic stature” published in “Live Mint” on 30 April 2025. India must redefine poverty amid rising incomes and challenges.

UPSC Syllabus Topic: GS Paper3- Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context: India is set to become an upper middle-income country by 2030—a key milestone in its long battle against mass poverty. This progress, while promising, brings fresh challenges. The biggest among them is the need to redefine poverty in a nation undergoing significant economic and social transformation.

For detailed information Revisiting the Poverty Line read this article here

India’s Imminent Economic Milestone

1. Crossing into a New Income Category: India is currently classified as a lower middle-income country. By 2030, its per capita income is expected to reach $4,468, marginally above the World Bank’s threshold of $4,516 for upper middle-income status.
2. IMF Forecast Highlights: The IMF projects India’s GDP will rise to $6.77 trillion by 2030. Per capita income will increase from $2,878 in 2025 to $4,468 in 2030. In PPP terms, it will grow from $10,396 to $13,638.
3. Classification Criteria Can Shift: These thresholds are revised periodically. Despite estimation uncertainties, India is clearly nearing a higher economic bracket.

India’s Outdated Poverty Data

1. Stale National Estimates: India has not updated its official poverty line since 2012. The 2017–18 consumption survey was not released, and the 2023–24 survey has not been used to define a new poverty line.
2. How Poverty Is Measured: Poverty lines are based on household consumption surveys. These reflect costs of basic food and essential non-food items. They must be revised with changing prices, needs, and living standards.
3. Need for Timely Revision: India’s current poverty benchmarks are outdated and do not reflect its economic transformation. A recalibrated poverty line is urgently needed.

Re-examining Poverty Metrics

1. Flawed Measurement Standards: Many estimates use deprivation norms better suited to poor countries. This fails to represent the reality of an economy nearing upper middle-income status.
2. Global Poverty Benchmarks: India has nearly eliminated poverty by the $2.15/day global line. But this can lead to premature optimism.
3. Higher International Thresholds: The World Bank recommends $3.65/day for lower middle-income and $6.85/day for upper middle-income countries. These offer more realistic poverty benchmarks.

Policy Implications

1. Shifting the Optics: Only 2.3% live below $2.15/day, but 28.1% fall below $3.65/day. A higher poverty line will show more poor but reveal the true picture.
2. Reorienting Welfare Programmes: Updated poverty data will help redesign government schemes aligned with present economic realities.

Question for practice:

Examine why India needs to redefine its poverty line as it approaches upper middle-income status.