Poverty in India: A Disturbing Reality Despite Claims of Progress?

Claims that poverty has nearly disappeared in India are misleading and mask the deeper issue of a lack of comprehensive data on the extent of poverty, as per a study.

The study, authored by C. A. Sethu, L. T. Abhinav Surya, and C. A. Ruthu, challenges recent assertions that the poverty ratio in India has dropped below 5%, as claimed by NITI Aayog's CEO, B.V.R. Subrahmanyam, in 2024. As per the study, over 26% of Indians still live below the poverty line, a stark contrast to the optimistic narrative promoted by some.

Drawing on data from the 2022-23 Household Consumer Expenditure Survey (HCES), the study recalculated the Rangarajan poverty line for each state and rural-urban area, providing a sobering picture of India's poverty crisis. The study suggests that more than a quarter of India's population lives in poverty, a number that challenges the narrative of widespread prosperity.

The Data Dilemma: Official Silence and Shifting Metrics

The Review of Agrarian Studies editorial, which published the study, highlights two key issues: the absence of reliable data and the government's shift away from measuring poverty through consumption expenditure—traditionally seen as a proxy for income. Instead, the focus has shifted to other measures of living standards, leading to a lack of clarity on the true extent of poverty.

For over a decade, the Indian government has remained silent on the official measure of poverty, and no official data has been released since 2013. As per the 2013 estimate by the Planning Commission, 25.7% of rural Indians and 13.7% of urban Indians lived below the poverty line, based on the Expert Group’s poverty line using data from the 2011-12 Consumer Expenditure Survey.

Following the 2011-12 data, the Rangarajan Expert Group introduced a higher poverty line, accounting for non-food essentials, which indicated that 30.9% of rural populations and 26.4% of urban populations were poor. These estimates, however, were never officially endorsed. Since then, no official estimates were released until the 2024 data, based on the 2022-23 HCES.

Data Quality Concerns and the Call for a Money Metric

The latest round of HCES data, however, comes with a caveat: due to changes in sample design, questionnaire items, and data collection methods, comparing this data with earlier rounds is not straightforward. As per the editorial, the absence of a sub-sample with the old design makes it difficult to assess the impact of these methodological changes.

While the Multidimensional Poverty Index (MPI), developed by NITI Aayog, is a positive step forward, it is not a substitute for measuring income poverty, as per the editorial. The MPI reflects broader aspects of living standards, but it cannot replace the direct measurement of poverty based on consumption.

Shameful Numbers: The Extent of Poverty in India

The study by Sethu, Surya, and Ruthu reveals a shocking truth: despite using a relatively low poverty line threshold, over a quarter of India's population still lives below it. The recalculated poverty head-count ratio reveals that 27.4% of rural Indians and 23.7% of urban Indians are poor, meaning that 361 million people in India—more than the entire population of the United States—cannot afford basic necessities.

As per the authors, India ranks first in the world in terms of the absolute number of people living in poverty, despite being the fifth-largest economy globally. This shameful record underscores the urgent need for comprehensive data and a renewed focus on addressing poverty through targeted policies.

Bringing Back the Money Metric

At a recent online panel discussion hosted by the Foundation for Agrarian Studies, experts emphasized the importance of reinstating the “money metric” in estimating poverty. Madhura Swaminathan, a professor at the Indian Statistical Institute, argued that while the MPI is useful, the focus must return to income-based poverty measures, especially as new rounds of consumption data become available.

P. C. Mohanan, Chairman of the Kerala State Statistical Commission, also remarked on the extensive exercise undertaken by the study's authors in recalculating poverty lines and questioned whether such exercises should be repeated every time new data is released.

As the government remains silent, the study serves as a wake-up call. It highlights the urgent need for a clear, updated measure of poverty in India, one that will help policymakers address the real problem of ending poverty once and for all.