India’s Poverty Decline: Trends and Challenges

Why in News ?

A recent research paper by Arvind Panagariya, Chairman of the 16th Finance Commission, concludes that India has “virtually eliminated” extreme poverty between 2011–12 and 2023–24, with extreme poverty levels declining to around 2%. The findings have renewed debate on poverty measurement, welfare effectiveness, and the future focus of India’s social policy.

Background & Context

Poverty reduction has remained a central objective of India’s development strategy since Independence. While early decades focused on food security and basic needs, the post-2000 period witnessed a shift toward targeted welfare delivery, consumption growth, and multidimensional approaches.

In the absence of official poverty estimates after 2011–12, recent academic and policy studies — including this paper — have attempted to reassess poverty trends using consumption data, welfare coverage, and non-monetary indicators.

Key Highlights of the Study on Poverty

1. Extreme Poverty Nearly Eliminated

• Poverty declined sharply from 21.9% (2011–12) to 2.3% (2023–24).
• This indicates near-elimination of extreme poverty, driven by:
  • Rising household consumption
  • Improved nutrition
  • Wider access to welfare schemes and basic services

2. Broad-Based Decline Across Social Groups

• Significant poverty reduction recorded among:
  • Scheduled Castes (SCs)
  • Scheduled Tribes (STs)
  • Other Backward Classes (OBCs)
  • Forward Castes (FCs)
• ST poverty declined to 8.7%, though it remains higher than other groups.

3. Narrowing Religious Poverty Gaps

• Rural poverty among Muslims is now marginally lower than among Hindus, reversing the perception of persistently higher Muslim poverty.
• Indicates convergence driven by welfare coverage and consumption growth.

4. Faster Poverty Reduction in Rural India

• Rural poverty fell by 22.5 percentage points, compared to 12.6 points in urban areas.
• Factors include:
  • Expansion of food security schemes
  • Direct Benefit Transfers (DBT)
  • Growth in rural consumption

5. Near-Zero Poverty States and UTs

• Regions with poverty levels close to zero:
  • Himachal Pradesh
  • Sikkim
  • Goa
  • Delhi
  • Chandigarh
  • Daman & Diu

What is Poverty ? (Conceptual Clarity)

World Bank Definition

Poverty is defined as “pronounced deprivation in well-being”, where individuals lack sufficient income or consumption to meet basic needs.

• International Extreme Poverty Line: USD 3.00 per person per day (2021 PPP)

Indian Context

• Poverty is measured using a poverty line, defined as the minimum expenditure required for socially acceptable basic needs.
• The poverty ratio reflects the proportion of the population living below this line.

Poverty Estimation in India: Evolution

Post-Independence

• Planning Commission (1962): First official estimates
• Alagh Committee (1979): Calorie-based norms
• Lakdawala Committee (1993): Consumption expenditure approach

Tendulkar Committee (2009)

• Shifted away from calorie norms
• Introduced uniform Poverty Line Basket (PLB)
• Used Mixed Reference Period (MRP)
• Poverty Line (2011–12):
  • ₹816 (rural)
  • ₹1,000 (urban)

Rangarajan Committee (2014)

• Separate rural and urban PLBs
• Poverty Line:
  • ₹972 (rural)
  • ₹1,407 (urban)
• Not officially adopted by the government

Multidimensional Poverty Measurement

Global MPI

• Developed by UNDP and OPHI
• Measures deprivations in:
  • Health
  • Education
  • Living standards

National MPI (India)

• Computed by NITI Aayog using NFHS data
• Multidimensional poverty declined from:
  • 29.17% (2013–14) → 11.28% (2022–23)
• About 24.82 crore people exited multidimensional poverty

Inequality Trends

• Gini Index declined from 28.8 (2011–12) to 25.5 (2022–23)

Types of Poverty 

Factors Contributing to Poverty in India (PRESSURE Framework)

• P – Persistent Inequality: Top 10% hold ~57% of national income
• R – Rural Dependence: Agriculture employs 46% but contributes only 18% to GDP
• E – Education Deficits: ASER 2024 shows weak foundational learning
• S – Social Exclusion: Low female labour participation and wage gaps
• S – Slum Vulnerability: 17% urban population in slums (Census 2011)
• U – Unemployment & Informality: Youth unemployment at 10.2%; 80% informal workforce
• R – Regional Disparities: Bihar >25% poverty vs near-zero in Kerala
• E – Environmental Stress: Climate shocks disproportionately affect the poor

Measures to Reduce Poverty: PROSPER Strategy

• P – Strengthen Public Services: Health, nutrition, education (Ayushman Bharat, POSHAN, Samagra Shiksha)
• R – Rural Livelihood Diversification: PM-KUSUM, dairy, fisheries, MGNREGA assets
• O – Skilling & Employment: PMKVY, labour-intensive manufacturing
• S – Social Safety Nets: ONORC, PMAY-U 2.0, DBT
• P – Women & Marginalised Inclusion: SHGs, Aspirational Districts
• E – Climate Resilience: Water conservation, Mission LiFE
• R – Regional Balancing: PM-JANMAN, Aspirational Blocks Programme