Poverty is when a person or a family cannot a ord the basics for a decent life.
According to the
Human Development Report (1997), poverty is not just about not having money but it is about
not having choices and opportunities to live a decent life. Eradication of poverty, therefore, is
accepted now as a basic human right and a moral commitment, both at the national and the
global levels.
Classification of Poverty
o Absolute poverty: It is common in underdeveloped countries and this is known as
extreme poverty and those who belong to this poverty struggle for basic needs.
o Relative poverty: It is defined as a process that is developed for income inequality
which is developed due to commemoration between living surroundings and
economic standards.
Measuring Poverty The poverty line separates the poor and the non-poor. However, there are
many kinds of poor; the absolutely poor, the very poor and the poor. Similarly, there are various
kinds of non-poor; the middle class, the upper middle class, the rich, the very rich and the
absolutely rich. One can think of the poverty line as a line or continuum from the very poor to
the absolutely rich with the poverty line dividing the poor from the non-poor.
The Poverty Line: The Poverty Line is a monetary threshold under which an individual is
considered to be living in poverty. The National Sample Survey Organization (NSSO) collects
data regarding estimation of poverty in India. There are many ways of measuring poverty. One
way is to determine it by the monetary value (per capita expenditure) of the minimum calorie
intake that was estimated at 2,400 calories per day for a person in rural areas and 2,100 calories
per day for a person in the urban areas. Based on this, in 2011-12, the poverty line was defined
for rural areas as consumption worth Rs 816 per person a month and for urban areas it was Rs
1,000. Thus, the Government uses Monthly Per Capita Expenditure (MPCE) as proxy for income
of households to identify the poor.
International Poverty Line: The World Bank, defines a person as extremely poor if she
is living on less than $2.15 per day, which is adjusted for inflation as well as price
di erences between countries.
What have been the Poverty Line Estimation in India?
Tendulkar Committee (2009): The poverty line in the Suresh Tendulkar methodology
was expenditure of ₹33 a day in urban areas and ₹27 a day in rural areas.
o Thus, India’s poors as percentage of total population in 2011-12 as per the
Tendulkar committee was 21.9%.
Rangarajan committee(2014): In the Rangarajan methodology, it was Rs. 47 a day in
urban areas and Rs. 30 a day in rural areas.
o Thus, India’s poor population as percentage of the Indian population in 2011-12
was 29.5, as per Rangarajan committee.
Extreme Poverty: The World Bank reported that the extreme poverty rate
(living on less than $2.15/day, 2017 PPP) fell from 16.2% in 2011-12 to just
2.3% in 2022-23, lifting over 171 million people out of extreme poverty.
Multidimensional Poverty: The government reported that over 248 million
people escaped multidimensional poverty between 2013-14 and 2022-23, with
the Multidimensional Poverty Index (MPI) falling from 29.17% to 11.28%
Poverty Alleviation
Poverty Alleviation is the set of steps taken in an economic and humanitarian way to eradicate
poverty in a country
Strategies in 2020
Economic growth: The Economic Survey 2020-21 emphasized that continued
economic growth was crucial for lifting people out of poverty.
Financial inclusion: Programs like the Pradhan Mantri Jan Dhan Yojana were key in
ensuring more people had access to banking services, which helped mitigate the
economic shock of the pandemic.
Social safety nets:
o The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKY) provided free food grains
to the poor, which was vital in absorbing the shock of the pandemic and
preventing a surge in poverty.
o Government initiatives like the Pradhan Mantri Awas Yojana (PMAY) continued to
help individuals with their housing needs.
Multidimensional poverty reduction: Beyond monetary measures, India continued to
focus on improving health, education, and living conditions, which contributed to a
significant long-term decline in multidimensional poverty.
Decline in Poverty and Emerging Policy Priorities
Sharp Decline in Poverty Ratios: India’s all-India poverty rate dropped from 29.5% in
2011–12 to 4.9% in 2023–24, indicating near eradication of extreme poverty.
According to the World Bank’s $2.15/day (Purchasing Power Parity-PPP)
benchmark, poverty declined from 16.2% to 2.3% between 2011–12 and 2022–
23.
Improved Living Standards and Equity: The share of population below $3.65/day (PPP)
(lower-middle-income line) dropped from 61.8% to 28.1%, indicating rising
consumption levels.
Falling Inequality: Gini coe icient (measuring consumption inequality) improved from
0.310 to 0.253, suggesting more equitable distribution of resources.
Key Drivers of Poverty Reduction
Strong Economic Growth: Real GDP grew by 9.2% in 2023–24, generating employment
and income.
Moderated Inflation: Consumer Price Index (CPI) eased to 5.4%, increasing real
purchasing power, especially for the bottom 40%.
Enhanced Survey Methodology: The NSO adopted modern sampling techniques,
expanded sectoral coverage, and updated consumption classifications, thereby
improving data accuracy.
Improved Welfare Delivery: Expansion of Direct Benefit Transfers (DBT), JAM trinity (Jan
Dhan–Aadhaar–Mobile), and food security schemes enhanced last-mile service delivery.