The latest State Bank of India (SBI) research report points out a substantial reduction in the incidence of poverty in both rural and urban India in FY24, post the robust government initiatives for support measures and better consumption patterns of the country’s lowest income groups. Urban poverty has declined to 4.09% in FY24 as against 4.6% in FY23 and 13.7% in FY12.
Rural poverty has declined largely because of growth in consumption among the lowest-income deciles, which have been supported by effective government interventions. “The sharp decline in rural poverty ratio is on account of higher consumption growth in lowest 0-5 per cent decile with significant government support and such support is important as we also find that change in food prices has a significant impact on not just food expenditures, but overall expenditure in general,” the report states.
The findings are further supported by data from the Ministry of Statistics & Programme Implementation’s Household Consumption Expenditure Survey. This survey revealed a narrowing consumption inequality in both rural and urban areas between August 2023 and July 2024, compared to the previous year. The gap in rural-urban monthly per capita consumption expenditure has also declined substantially and stands at 69.7 percent, which is an improvement of a whopping 88.2 percent in 2009-10.
Infrastructure development has played a pivotal role in reducing the income disparity between rural and urban areas. Enhanced rural mobility, direct benefit transfers (DBT), and increased farmer incomes have significantly improved rural livelihoods, the report observes.
SBI Research estimates the poverty rate in India now ranges between 4% and 4.5%, with minimal instances of extreme poverty. “We believe urban poverty could decline even further. At an aggregate level, we believe poverty rates in India could now be in the range of 4-4.5 per cent with almost minimal existence of extreme poverty,” it adds.
However, food inflation remains a concern, particularly for lower-income states where it affects consumption demand more significantly. Uttar Pradesh and Bihar, even at this point, continue to feature savings rates at lower levels and higher rates of emigration, respectively.
The poverty line for FY24 is at ₹1,632 in rural and ₹1,944 in the urban. Estimates of these are likely to be available for marginal adjustments after completion of the Census 2021.
