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The Wire
09-06-2025
- General
- The Wire
Why India Needs to Update Its Own Poverty Line
Menu हिंदी తెలుగు اردو Home Politics Economy World Security Law Science Society Culture Editor's Pick Opinion Support independent journalism. Donate Now Economy Why India Needs to Update Its Own Poverty Line Dipa Sinha 4 minutes ago It is important to remember that poverty ratios derived from consumption-expenditure-based poverty lines represent only one dimension of well-being. Illustration: Pariplab Chakraborty Real journalism holds power accountable Since 2015, The Wire has done just that. But we can continue only with your support. Contribute now India's poverty numbers are once again making headlines, ironically even though our official poverty lines have not been updated in over a decade. The World Bank has revised the International Poverty Line (IPL) from $2.15/day (2017 purchasing power parity or PPP) to $3.00/day (2021 PPP). Based on this new line, the poverty ratio in India is estimated to be 5.25% compared to 27.12% in 2011-12. While it could be true that the poverty ratio has declined in the last decade, there are a number of questions related to the data and methodology which put a cloud over both the extent of decline as well as the level of poverty currently. A longstanding criticism that these poverty lines of the World Bank are extremely low and do not reflect what most would accept as absolute poverty still holds. Based on the latest data from the International Comparison Program (ICP) based on which these new estimates have been released, one PPP$ is roughly equivalent to Rs 20. Therefore, this new poverty line of $3 a day reflecting extreme poverty is equivalent to only Rs 60 per day of consumption expenditure per person. On the basis of the higher IPL of $4.2 PPP (i.e. Rs 84) per day, 23.89% Indians are estimated to be poor. We don't need to be experts to imagine what living on less than Rs 84 a day means (this is to account for all expenses of a person including rent, travel, food, education, health and other consumption). It is common practice for poverty lines to be revised at regular intervals to reflect the change in living standards and consumption patterns. The last time India's official poverty line was changed was in 2009 based on the Tendulkar committee recommendations. In 2015, the Rangarajan committee made recommendations updating the poverty lines but it is not clear what their official status is. In fact, India stopped estimating consumption-based poverty after 2011-12 and has been relying in recent times on these World Bank and IMF estimates. India not in consideration As mentioned in the official press release of the Union government, the new IPL reflects (a) revised national poverty lines in low income countries (b) improved measurement of consumption, particularly food and non-food items and (c) the integration of 2021 PPP estimates. In fact, this press note quotes the World Bank saying, 'Most of this upward revision is explained by revisions in the underlying national poverty lines rather than a change in prices'. But the issue is that India is not one of the countries that has made this upward revision to its poverty line! And therefore, the IPL does not include the Indian national poverty line in its consideration at all. While the verdict is out on whether the new methodology of collecting data that was adopted in Household Consumption Expenditure Surveys (HCES) of 2022 and 2023 captures consumption better, what is not in doubt is that this data are now not comparable with the previous rounds of consumption expenditure. While the World Bank has considered the change in the recall period and adjusted for that while comparing with 2011-12 (from URP to MMRP), the HCES changed not just the recall period but the entire way in which data were collected – with multiple visits to each household and changes in the questionnaire. While there have been some validation exercises to understand what the impact of these changes are in comparing trends, no official national estimates have been released so far on what the poverty rates are based on these new surveys. PPP estimates of the ICP are also known to have their methodological issues which are too complex to discuss here. Limitations What is important, however, is to understand the limitations of these global poverty estimates and to be cautious not to assign them more weight than they merit. The World Bank factsheet on the new poverty estimates include FAQs which also clearly explain the limited use of these international poverty ratios by stating: 'A country's national poverty line continues to be far more appropriate for underpinning policy dialogue or targeting programs to reach the poorest within that specific context.' Further, it also states that, 'when analyzing trends for a single country, the national poverty line is the appropriate standard to use. It captures the definition of poverty that is most relevant for this context, as well as how it should be updated over time to reflect changes in survey methodologies and evolving needs.' What is required therefore in India is an urgent exercise at updating our own poverty line – this was something that was under the remit of the erstwhile Planning Commission. The NITI Aayog must now take this on. The expert committee must develop a methodology that robustly measures poverty, grounded in a normative understanding of the basic minimum standards we, as a country, believe every citizen should have access to. In the absence of such an exercise, the old poverty ratios are still being used for making crucial allocations to states for programmes such as the National Social Assistance Programme (NSAP) through which social security pensions for the elderly, single women and disabled are disbursed. Further, it is important to remember that poverty ratios derived from consumption-expenditure-based poverty lines represent only one dimension of well-being. To gain a comprehensive understanding of the realities of people's lives, a broader set of indicators must be considered. These include employment status, real wage trends, health and education outcomes, food security and nutritional status, as well as income and wealth inequality, among others. Taken together, these dimensions provide a more holistic picture of well-being – and on many of these fronts, both national and international estimates indicate that India still has a significant distance to cover. Dipa Sinha is a development economist. The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments. Make a contribution to Independent Journalism Related News Reality Check: Beyond Statistics, is Poverty Actually Reducing in India? 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The Print
08-06-2025
- Business
- The Print
Extreme poverty in India down to 5.3 pc in 2022-23: World Bank
As against 34 crore people below poverty line (USD 3/per day) in 2011-12, the numbers have come down to 7.5 crore in 2022-23 in absolute numbers. Given India's inflation rate between 2017 and 2021, a revised extreme poverty line of USD 3 would constitute a 15 per cent higher threshold than USD 2.15 expressed in 2021 prices and result in a 5.3 per cent poverty rate in 2022-23, the World Bank said in a report. New Delhi, Jun 7 (PTI) India's extreme poverty rate declined sharply to 5.3 per cent over a decade from 27.1 per cent in 2011-12 even as the World Bank revised upwards its threshold poverty line to USD 3 per day. The World Bank has announced a major revision to global poverty estimates, raising the International Poverty Line (IPL) from USD 2.15/day (2017 PPP) to USD 3/day (2021 PPP), according to a factsheet issued by the Press Information Bureau (PIB) on the report. 'While the change led to a global increase in the count of extreme poverty by 125 million, India emerged as a statistical outlier in a positive direction. Using more refined data and updated survey methods, India not only withstood the raised threshold but also demonstrated a massive reduction in poverty,' PIB said in its factsheet details issued on Saturday. The new poverty line would have increased the count of global extreme poverty by 226 million people. But thanks to India's data revision, the net global increase was only 125 million, as India's revised data reduced the count by 125 million on its own, it said. In India, the World Bank report said, 54,695,832 people lived on less than USD 3 per day in 2024. Thus, the poverty rate at USD 3 per day (2021 PPP — percentage population) is 5.44 per cent in 2024. The extreme poverty rate decreased from 16.2 to 2.3 per cent between 2011-12 and 2022-23, while the poverty rate at the lower middle income country (LMIC) line declined by 33.7 percentage points, it said. Free and subsidised food transfers supported poverty reduction, and the rural-urban poverty gap narrowed. The five most populous states account for 54 per cent of the extremely poor, it said. With regard to economy, the report said, real GDP of India was around 5 per cent below the pre-pandemic trend level as of FY25. Growth should gradually converge back to potential over 2027-28 assuming the current global uncertainties are resolved in an orderly fashion, it said. 'The outlook, however, is subject to significant downside risks, as policy shifts may continue to unfold globally. Elevated trade tensions would dampen demand for India's exports and further delay the recovery in investment,' it said. The current account deficit is expected to average around 1.2 per cent of GDP over FY26-28 and remain adequately financed by capital inflows, it said, adding that foreign exchange reserves are projected to remain stable around 16 per cent of GDP. India has lifted 171 million people from extreme poverty in the decade between 2011-12 and 2022-23, the World Bank said. 'Over the past decade, India has significantly reduced poverty. Extreme poverty (living on less than USD 2.15 per day) fell from 16.2 per cent in 2011-12 to 2.3 per cent in 2022-23, lifting 171 million people above this line, the World Bank had said in its 'Poverty & Equity Brief' on India in April. The rural extreme poverty dropped from 18.4 per cent to 2.8 per cent, and urban from 10.7 per cent to 1.1 per cent, narrowing the rural-urban gap from 7.7 to 1.7 percentage points, it had said. PTI DP TRB This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
News18
08-06-2025
- Business
- News18
India Defies Global Poverty Trends Amid World Bank's Revised Estimates: What Does This Mean?
Last Updated: While the revision led to a global increase in the count of extreme poverty by 125 million, India not only withstood the raised threshold but demonstrated a massive drop in poverty India has emerged as a statistical outlier in a positive direction as the World Bank revised global poverty estimates, raising the International Poverty Line from USD 2.15 to USD 3.00 per day (based on 2021 purchasing power parity). While the change led to a global increase in the count of extreme poverty by 125 million, India not only withstood the raised threshold but also demonstrated a massive reduction in poverty, as per a central government fact sheet analysis. This was done using more refined data and updated survey methods. The new poverty line would have increased the count of global extreme poverty by 226 million people. But, due to India's data revision, the net global increase was only 125 million. WHAT DOES THE DATA SAY? According to World Bank data, over the decade from 2011-12 to 2022-23, India has lifted 171 million people out of extreme poverty (under USD 2.15 per day). The overall poverty rate dropped from 16.2 per cent to 2.3 per cent, or 5.3 per cent, when using the updated global benchmark (USD 3.00 per day) while accounting for purchasing power parity (PPP) adjustments. The data further showed reduction in rural poverty down to 2.8 per cent and urban to only 1.1 per cent, with widening access to food‑security schemes playing a key role. Challenges, however, remain in the form of urban youth unemployment and persistent wage inequality. WHY WAS THE POVERTY LINE REVISED? The World Bank said most of this upward revision is explained by revisions in the underlying national poverty lines rather than a change in prices. Here is what the new International Poverty Line (IPL) reflects: HOW DID INDIA INFLUENCE THE WORLD BANK'S GLOBAL BENCHMARK? This adjustment was expected to sharply increase the global count of those living in extreme poverty which was visible on poverty figures, estimated at 226 million people. According to the central government's fact sheet analysis, India's newly revised poverty data significantly softened the blow, reducing the count by 125 million. These figures offset more than half the global increase. India's updated consumption data significantly influenced the World Bank's global benchmark. The standout performance is largely attributed to improvements in data collection and measurement methods, which captured more actual spending leading to a more realistic poverty line and a lower poverty rate despite the increase in threshold. The country's latest Household Consumption Expenditure Survey (HCES) adopted the Modified Mixed Recall Period (MMRP) method, replacing the outdated Uniform Reference Period. This change provided a more accurate picture of household consumption, more effectively capturing actual spending. As a result, India's poverty rate in 2022-23 stood at just 5.25 per cent under the new USD 3.00 poverty line, and 2.35 per cent under the older USD 2.15 line – a dramatic decline from earlier decades. In 2011-12, applying MMRP reduced India's poverty rate from 22.9 per cent to 16.22 per cent, even under the older USD 2.15 poverty line. In 2022-23, poverty under the new USD 3.00 line stood at 5.25 per cent, while under the older USD 2.15 line it dropped further to 2.35 per cent. WHAT IS THE HOUSEHOLD CONSUMPTION SURVEY? The Household Consumption Expenditure Survey (HCES) is designed to collect information on consumption and expenditure of the households on goods and services. Here are the key highlights of the HCES for 2023-24: Average Monthly Per Capita Expenditure (MPCE): In 2023-24, the average MPCE was Rs 4,122 in rural areas and Rs 6,996 in urban areas, excluding the value of items received free through social welfare programmes. When these are included, the figures rise to Rs 4,247 and Rs 7,078, respectively. This is a significant increase from the rural MPCE of Rs 1,430 and urban MPCE of Rs 2,630 in 2011-12 Urban-Rural Consumption Gap: The urban-rural consumption gap has narrowed from 84% in 2011-12 to 70% in 2023-24, indicating a reduction in consumption disparities between urban and rural households. State-wise Trends: All 18 major states reported an increase in average MPCE for both rural and urban areas. Odisha experienced the highest rural increase (about 14%), while Punjab saw the highest urban increase (about 13%). Consumption Inequality: The Gini coefficient, a measure of consumption inequality, decreased from 0.266 to 0.237 in rural areas and from 0.314 to 0.284 in urban areas between 2022-23 and 2023-24, suggesting a reduction in consumption inequality across most major states. SO, HAS POVERTY IN INDIA REDUCED? These findings complement the World Bank's revised figures, reinforcing the conclusion that poverty in India has reduced not just statistically, but through tangible improvements in household living standards and incomes. top videos View all India's poverty decline is a story of technical refinement meeting policy results. In the face of a raised poverty benchmark, the country showed that more honest data, not diluted standards, can reveal real progress. As the global community recalibrates poverty goals, India's example sets a precedent: evidence-based governance, sustained reforms, and methodological integrity can together deliver transformational outcomes. Get Latest Updates on Movies, Breaking News On India, World, Live Cricket Scores, And Stock Market Updates. Also Download the News18 App to stay updated! tags : poverty world bank Location : New Delhi, India, India First Published: June 08, 2025, 17:38 IST News explainers India Defies Global Poverty Trends Amid World Bank's Revised Estimates: What Does This Mean?
India Gazette
07-06-2025
- Business
- India Gazette
India defies global poverty trends amid World Bank's revised estimates
New Delhi [India], June 7 (ANI): While the World Bank's revision to global poverty estimates led to a global increase in the count of extreme poverty by 125 million, India emerged as a statistical outlier in a positive direction, according to the government's factsheet analysis. The World Bank recently raised the International Poverty Line (IPL) from USD 2.15 to USD 3.00 per day (based on 2021 purchasing power parity). The revision was intended to reflect updated costs of living and more accurate consumption data. The global poverty measures produced by the World Bank use purchasing power parities (PPPs) to account for differences in price levels across the world. These PPPs are periodically revised in light of new data on relative living costs. This adjustment was expected to sharply increase the global count of those living in extreme poverty which was visible on poverty figures, estimated at 226 million people. However, India's newly revised poverty data significantly softened the blow, reducing the count by 125 million. These figures offsets more than half the global increase. India's standout performance is largely attributed to improvements in data collection and measurement methods. The country's latest Household Consumption Expenditure Survey (HCES) adopted the Modified Mixed Recall Period (MMRP) method, replacing the outdated Uniform Reference Period. This change provided a more accurate picture of household consumption, capturing actual spending more effectively. As a result, India's poverty rate in 2022-23 stood at just 5.25 per cent under the new USD 3.00 poverty line, and 2.35 per cent under the older USD 2.15 line -- a dramatic decline from earlier decades. The data also showed rising household spending: average monthly per capita expenditure rose to Rs 4,122 in rural areas and Rs 6,996 in urban areas, excluding the value of items received free through social welfare programs. Additionally, consumption inequality fell, with the Gini coefficient declining in both rural and urban regions. The government's factsheet detail added that India's example shows how methodological integrity, better data, and sustained policy efforts can work together to deliver real developmental outcomes. (ANI)
Hans India
07-06-2025
- Business
- Hans India
Poverty in India reduced via tangible boost in household living standards, incomes
New Delhi: The World Bank's revised figures reinforce that poverty in India has reduced not just statistically, but through tangible improvements in household living standards and incomes, according to a government factsheet released on Saturday. India's poverty decline is a story of technical refinement meeting policy results. In the face of a raised poverty benchmark, India showed that more honest data, not diluted standards, can reveal real progress. As the global community recalibrates poverty goals, India's example sets a precedent: evidence-based governance, sustained reforms, and methodological integrity can together deliver transformational outcomes, the factsheet read. The World Bank has announced a major revision to global poverty estimates, raising the International Poverty Line (IPL) from $2.15 per day (2017 PPP) to $3.00 per day (2021 PPP). While the change led to a global increase in the count of extreme poverty by 125 million, India emerged as a statistical outlier in a positive direction. Using more refined data and updated survey methods, India not only withstood the raised threshold but also demonstrated a massive reduction in poverty. The new poverty line would have increased the count of global extreme poverty by 226 million people. But thanks to India's data revision, the net global increase was only 125 million — as India's revised data reduced the count by 125 million on its own, the data showed. India's latest Household Consumption Expenditure Survey (HCES) adopted the Modified Mixed Recall Period (MMRP) method, replacing the outdated Uniform Reference Period (URP). This shift used shorter recall periods for frequently purchased items and captured more realistic estimates of actual consumption. As a result, consumption recorded in national surveys rose, leading to a drop in poverty estimates. In 2011–12, applying MMRP reduced India's poverty rate from 22.9 per cent to 16.22 per cent, even under the older $2.15 poverty line. In 2022–23, poverty under the new $3.00 line stood at 5.25 per cent, while under the older $2.15 line, it dropped further to 2.35 per cent. In 2023–24, the average Monthly Per Capita Expenditure (MPCE) was Rs 4,122 in rural areas and Rs 6,996 in urban areas, excluding the value of items received free through social welfare programmes. When these are included, the figures rise to Rs 4,247 and Rs 7,078, respectively. This is significant increase from the rural MPCE of Rs 1,430 and urban MPCE of Rs 2,630 in 2011-12. The urban-rural consumption gap has narrowed from 84 per cent in 2011–12 to 70 per cent in 2023–24, indicating a reduction in consumption disparities between urban and rural households. All 18 major states reported an increase in average MPCE for both rural and urban areas. Odisha experienced the highest rural increase (about 14 per cent), while Punjab saw the highest urban increase (about 13 per cent). 'The Gini coefficient, a measure of consumption inequality, decreased from 0.266 to 0.237 in rural areas and from 0.314 to 0.284 in urban areas between 2022–23 and 2023–24, suggesting a reduction in consumption inequality across most major states,' according to the factsheet.
