By A recent study released by the State Bank of India (SBI) revealed that India’s headline poverty rate ranged between 4.5 and 5 percent during the fiscal year 2022-23. The study, based on the latest Household Consumption Survey (HCES), demonstrated a significant decline in rural poverty to 7.2 percent in 2022-23 from 25.7 percent in 2011-12. Concurrently, urban poverty also decreased to 4.6 percent from 13.7 percent during the same period.The report highlighted a substantial 440-basis point reduction in rural poverty since 2018-19 and a 170-basis point decline in urban poverty post-pandemic. This suggests the positive impact of various government programs targeting the lower socio-economic strata, particularly in rural areas.
The SBI report estimated the new poverty line at Rs 1,622 for rural areas and Rs 1,929 for urban areas, based on recommendations from an expert group led by Suresh Tendulkar. The poverty line was adjusted for decadal inflation and imputation factors derived from the NSSO report, starting with the 2011-12 estimates of Rs 816 for rural and Rs 1,000 for urban areas.Previous findings from a World Bank paper had indicated a decline in India’s poverty rate to 11.6 percent for rural areas and 6.3 percent for urban areas in 2018-19. The latest HCES results, released after over a decade, suggested a narrowing gap between rural and urban consumption, accompanied by reduced spending inequality among the poorest and wealthiest households.
The SBI report emphasized the role of enhanced physical infrastructure in fostering rural-urban mobility, contributing to a diminishing horizontal income gap between rural and urban landscapes, as well as a reduction in vertical income gaps within rural income classes. Additionally, the report noted India’s increasing aspirational nature, with discretionary consumption witnessing a rise in both rural and urban areas, indicating a faster pace of aspiration in rural regions compared to urban areas.
