THE CONTEXT: In June 2025 the World Bank (WB) adopted 2021 purchasing-power-parity (PPP) prices and raised its global extreme-poverty line from $2.15 to $3 a day, revising India’s poverty headcount for 2022-23 to 5.75 per cent or about 7.5 crore people—down from 27 per cent in 2011-12.
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- Simultaneously, the WB back-cast older data: the 1977-78 poverty ratio is now 47 per cent instead of 64 per cent, confirming a steadier historical decline than earlier believed.
THE BACKGROUND:
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- India’s domestic poverty lines have evolved from Alagh (1979) to Lakdawala (1993), Tendulkar (2009) and the yet-to-be-notified Rangarajan (2014) committee recommendations.
- Since 2011-12 no official monetary poverty estimates have been released; hence scholars, NITI Aayog and global bodies rely on WB’s PIP and the National Multidimensional Poverty Index (MPI), which shows poverty falling from 24.85 per cent (2015-16) to 11.28 per cent (2022-23), lifting 24.82 crore people
THE THEORETICAL FRAMEWORK:
| Approach | Core Idea | Key Metric/Line | Strengths | Limitations |
|---|---|---|---|---|
| Monetary (Absolute) | Minimum consumption basket priced at PPP | $3 & $4.20 (WB); Rs 62 & ₹87 per day (2025 PPP) | Globally comparable; simple | Ignores non-income deprivations; rural-urban cost gaps |
| Relative | Poverty benchmarked to median income | 50 % of median | Captures inequality | Moves with overall prosperity; less useful for welfare targeting |
| Multidimensional (Alkire-Foster) | Overlapping deprivations (health, education, living standards) | MPI (12 indicators in India) | Diagnostics for policy; aligns with SDG-1.2 | Data-heavy; periodic household surveys needed |
WHY MEASUREMENT MATTERS (WHAT–WHY–HOW):
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- What: Poverty line is a policy cut-off to identify beneficiaries and evaluate programmes.
- Why: Precise targeting saves fiscal resources and ensures constitutional equity obligations (Art. 38, 39) are met.
- How: Combine survey data (NSS, PLFS, NFHS) with administrative big-data; convert local prices to PPP; validate with nutritional and labour-market indicators.
THE CURRENT SCENARIO:
| Poverty Line (per person per day) | Population below line (2022-23) | Comparable Benchmarks |
|---|---|---|
| WB extreme poverty: ₹62 | 7.5 crore – 5.25 % of Indians | One-third of global poor decline since 2011 |
| WB lower-middle-income line: ₹87 | 23.9 % or 34.2 crore | Threshold for SDG 1.1 in LMICs |
| WB upper-middle-income line: ₹171 | 82.7 % or 117.5 crore | Mirrors median consumption in UMICs |
| Avg. daily wage – casual female worker | ₹286 | MoSPI-PLFS 2022-23 |
| Avg. daily wage – salaried worker | ₹651 | MoSPI-PLFS 2022-23 |
THE SIGNIFICANCE:
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- Steep decline at the $3 line signals macro-stability and welfare traction, yet a quarter of Indians still live on < ₹87, revealing a ‘vulnerability zone’ one shock away from poverty relapse.
- Poverty-Inequality interaction: India’s Gini of 0.410 (2023) shows widening wealth gaps despite falling head-count poverty.
DRIVERS OF RECENT POVERTY REDUCTION
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- High-frequency food security: Pradhan Mantri Garib Kalyan Anna Yojana delivers 5 kg free grain/month to 80 crore citizens.
- Digital Direct Benefit Transfers (DBTs): ₹34-lakh-crore cumulative transfers with leakage < 2 % (Economic Survey 2024-25.
- Rural electrification & LPG penetration: Saubhagya and Ujjwala improved energy access from 56 % (2014) to 100 % village electrification (2022).
- Labour-intensive growth pockets: construction and gig-economy absorbed semi-skilled labour, although job quality remains low.
POLICY & INSTITUTIONAL FRAMEWORK IN INDIA
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- Legislation: National Food Security Act 2013, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005.
- Flagship Schemes: PM-KISAN, Ayushman Bharat-PM-JAY, Jal Jeevan Mission, PM-JANMAN, Dharti Aaba Gram Utkarsh Abhiyan, Aspirational Blocks Programme.
- Data Initiatives: Household Consumption Expenditure Survey 2022-23 (to be released), e-Shram portal, Social Registry.
GLOBAL BEST PRACTICES:
| COUNTRY | INNOVATIONS | TAKE-AWAY FOR INDIA |
|---|---|---|
| Chile | National MPI with five dimensions; Ingreso Ético Familiar CCT tops up incomes when MPI score < cut-off | Combine income transfers with service-linkage “bridges”. |
| China | Targeted Poverty Alleviation, micro-credit & relocation; lifted 98 mn (2013-20) | Micro-planning with county-level accountability. |
| Brazil | Bolsa Família’s dynamic registry updated every 2 yrs | Periodic verification curbs inclusion errors. |
THE ISSUES:
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- Methodological Vacuum: Absence of an updated official poverty line since 2011-12 leads to reliance on external estimates, impeding convergence of academic and policy debates.
- Data Gaps & Timeliness: Consumption and employment surveys face five-year lags; COVID-19 disrupted fieldwork, widening the evidence deficit.
- Hidden Urban Poverty: Slum and migrant households under-represented in NSS/PLFS samples; cost-of-living parity across cities ignored.
- Jobless Growth Syndrome: Employment elasticity fell from 0.39 (2000s) to 0.12 (2011-22); real wages of casual labour stagnated for women.
- Climate-Induced Vulnerability: 80 per cent of smallholders lack micro-insurance; heatwaves can wipe out seasonal incomes.
- Regional & Social Disparities: BIMARU belt and Scheduled Tribes show MPI almost double the national average.
- Inequality–Poverty Nexus: Top 1 % holds 53 % of wealth; fiscal redistribution via GST is mildly regressive.
THE WAY FORWARD:
Notify a Tiered National Poverty Line that links Tendulkar’s calorie-norm to current CPI and 2021 PPP; release annually with Consumption Survey to restore domestic credibility.
Create a Unified ‘Poverty Dashboard’ to merge monetary, MPI and nutrition indicators on an open data platform; enable district-level real-time targeting.
Institutionalise ‘One Survey Every Year’ by staggering NSS consumption modules and piggybacking on Aadhaar-enabled price data, cutting the evidence lag to 12 months.
Strengthen Urban Safety-Nets to extend MGNREGA-style ‘Deen Dayal Antyodaya Urban’ with skill vouchers and rental housing for migrant workers.
Fiscal Progressivity Re-balancing: Rationalise GST slabs and introduce an annual ‘solidarity surcharge’ on the top 0.1 % to fund health and education.
Women-Centric Livelihood Clusters: Triple financing for Self-Help Groups, mandate gender budgeting in state plans, and enforce crèche norms to lift female LFPR.
Nutrition-Smart PDS 2.0: Universal fortification (iron, B-12), integrate millets, and synchronise with Poshan Tracker to break the poverty-malnutrition loop.
Climate-Proof Poor Households: Expand PM-FBY crop insurance to cover heat-stress crops, and roll-out parametric disaster-risk micro-insurance for coastal districts.
Reward ‘MPI Champions’ States: Design a competitive cooperative-federalism grant that matches state expenditure for each percentage-point MPI reduction.
THE CONCLUSION:
India’s poverty story has undeniably improved, yet measurement debates mask pockets of persistent deprivation. A calibrated, multidimensional, and technologically enabled strategy—grounded in both equity and efficiency—is crucial for translating statistical victories into lived prosperity.
UPSC PAST YEAR QUESTION:
Q. The incidence and intensity of poverty are more important in determining poverty based on income alone”. In this context analyse the latest United Nations Multidimensional Poverty Index Report. 2020
MAINS PRACTICE QUESTION:
Q. Monetary poverty in India may be declining, but multidimensional deprivation and inequality remain pervasive. Analyse
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