Reduction in poverty and income inequality in India

Source: The post reduction in poverty and income inequality in India has been created, based on the article “India’s development landscape has undergone a structural shift” published in “Live mints” on 27th February 2024.

UPSC Syllabus Topic: GS Paper 1- Society-poverty and developmental issues.

News: The article talks about the Indian government’s recently released Fact Sheet on the Household Consumption Expenditure Survey (HCES) for 2022-23. It highlights a major reduction in poverty and income inequality in India over the last 11 years.

How has poverty been measured?

Poverty is measured using the World Bank’s purchasing power parity (PPP)-based $1.9 per capita per day line. Adjustments for inflation and rural-urban differences were made to calculate the poverty rates for 2022-23.

For information on Poverty Measurement in India read here

What does the new government report say about poverty in India?

Dramatic Decline in Poverty: The new government report shows a significant reduction in poverty in India, from 12.2% in 2011-12 to just 2% in 2022-23.

Poverty Lines Updated: The poverty lines have been revised to ₹1452 for rural and ₹1752 for urban areas per month, accounting for inflation rates of 5.7% and 5.6% respectively since 2011-12.

Extreme Poverty Nearly Eliminated: Based on the World Bank’s $1.9 per day poverty line, the report suggests that extreme poverty in India is almost eradicated.

Shift in Higher Poverty Line: Even with a higher poverty line of $3.2 PPP, poverty in India decreased significantly from 53.6% in 2011-12 to 21% in 2022-23.

Reduction in Inequality: The report also indicates a decline in income inequality, with the Gini coefficient from 28.7 to 27.0, and urban from 36.7 to 31.9.

Economic Growth: This reduction in poverty and inequality has coincided with substantial economic growth in both rural (3.1%) and urban (2.6%) regions.

What does critics say about poverty levels in India?

Skepticism About Poverty Reduction: Critics were of the opinion that poverty levels hadn’t significantly changed over the past 11 years.

Questioning Data Quality: The skepticism partly stems from the non-release of the 2017-18 Household Consumption Expenditure Survey data, which was cited for poor quality.

Debate on Poverty Estimation: There is an ongoing debate among experts about the methodologies and data used to estimate poverty levels in India.

Diverse Estimates: The range of poverty estimates by various entities, from 5% to 20%, using the World Bank’s $1.9 poverty line, adds to the confusion and debate.

Question for practice:

Examine how the recent Fact Sheet on the Household Consumption Expenditure Survey for 2022-23 reflects the changes in poverty and income inequality in India over the last 11 years.