Redrawing India’s Poverty Line: Need & Challenges

Table of contents

The IMF (2025) projects India will attain upper-middle-income status by 2030, with a per capita income of $4,468, signalling a transition from poverty alleviation to shared prosperity. This economic shift necessitates a contemporary poverty line that reflects current consumption patterns, urbanisation, and rising aspirations.

Poverty Line: Key Facts and Data

The poverty line is the minimal income required for basic needs, with extreme poverty defined by the World Bank as earning less than $2.15 per day (2017 PPP).
Extreme Poverty Rate: India’s extreme poverty rate has declined to 1.82% in 2023, indicating the near elimination of extreme poverty.
Lower-Middle-Income Poverty: Approximately 28.1% of India’s population lives below the $3.65/day threshold, the World Bank’s standard for lower-middle-income countries.
Poverty Reduction Success: Between 2011 and 2023, India lifted 378 million people out of poverty at the $3.65/day threshold, showing significant progress in poverty alleviation.
Rural Poverty Trend: Rural poverty decreased from 69% in 2011–12 to 32.5% in 2022–23, reflecting substantial improvements in rural living standards.
Urban Poverty Trend: Urban poverty declined from 43.5% to 17.2% over the same period, indicating enhanced economic conditions in urban areas.
Multidimensional Poverty Rate: According to the UNDP, in 2023, 11.28% of India’s population was multidimensionally poor, facing deprivations in health, education, and living standards.

Historical Evolution of Poverty Line in India

Committee/Period	Key Features	Limitations
Pre-Independence	Naoroji’s “Poverty and Un-British Rule” (subsistence norms)	Lacked data-driven frameworks
Alagh Committee (1979)	Based on calorie norms: 2,400 (rural) & 2,100 (urban)	Over-reliance on calorie-based thresholds
Tendulkar Committee (2009)	Shifted to consumption expenditure; included health & education	Identified 21.9% as poor (2011-12)
Rangarajan Committee (2014)	Higher thresholds: ₹32/day (rural), ₹47/day (urban); 29.5% poor	More inclusive, but not adopted
Post-2012	No official updates due to withheld consumption data	Created a policy vacuum

Need to Redraw the Poverty Line

Rising Economic Standards: Per capita income has tripled from ₹71,610 (2011–12) to ₹1,88,892 (2023–24) (PIB), rendering decade-old poverty benchmarks outdated and misaligned with current costs.
Persistent Multidimensional Deprivation: Despite income growth, 11.3% of Indians lack access to essential services like nutrition, education, & digital access (NITI Aayog), highlighting a gap beyond poverty.
Urbanisation-Induced Cost Escalation: Rapid urbanisation has inflated the costs of housing, healthcare, transport, and education, making the poverty line inadequate to reflect urban consumption.
Global Benchmarking Imperative: As India approaches upper-middle-income status (IMF projection: per capita income $4,468 by 2030), aligning with the $6.85/day PPP poverty line is vital for credibility.
Improving Welfare Targeting Efficiency: Stale poverty thresholds exclude eligible beneficiaries from flagship schemes like NFSA, PM-KISAN, and PMAY, weakening last-mile delivery and welfare efficacy.

Challenges in Redrawing the Poverty Line

Data Vacuum & Political Optics: Withholding of the 2017-18 Consumption Expenditure Survey and delay in the 2022-23 release reflect political sensitivity over poverty statistics.
Centre-State Fiscal Tensions: A revised poverty line may shift a greater welfare burden to states, leading to resistance.
Rural-Urban Cost Differential: Urban costs are 30–40% higher, necessitating region-specific poverty lines, especially for schemes like PMAY-Urban/Rural.
Inflation and Volatility: Frequent price shocks in food, fuel, and rent complicate regular updates to poverty thresholds.
Welfare Leakages: Without robust identification mechanisms, an expanded poverty net could worsen inclusion/exclusion errors, as flagged by NITI Aayog.

Way Forward for Redrawing India’s Poverty Line

Update the Monetary Poverty Line: Integrate findings from the NSSO Consumption Expenditure Survey 2022–23 to revise the outdated income thresholds in line with current economic realities.
Adopt a Tiered Poverty Framework: Establish three layers of poverty: extreme at $2.15/day, moderate at $3.65/day, and relative vulnerability at $6.85/day.
- Also, these definitions should be ensured to align with India’s upper-middle-income trajectory and World Bank standards.
Institutionalise a National Multidimensional Poverty Index: Develop an India-specific MPI with indicators like health, education, housing, and digital access for comprehensive poverty assessment.
Mandate 5-Yearly Independent Poverty Reviews: Conduct nationwide household poverty assessments every 5 years, supported by real-time data dashboards, third-party audits, and public transparency.
Reform Welfare Architecture: Replace the static BPL/APL model with a dynamic, tech-enabled vulnerability index leveraging SECC, Aadhaar, JAM Trinity, and AI-driven beneficiary targeting systems.

Redrawing India’s poverty line is not just an economic imperative but a constitutional and moral duty rooted in the spirit of Antyodaya. As India aspires to become a Viksit Bharat by 2047, an updated and multidimensional poverty line is vital to achieve SDG-1 (No Poverty) and SDG-10 (Reduced Inequality), ensuring inclusive growth and targeted social justice.

Reference: Live Mint | PMFIAS: Poverty In India

PMF IAS Pathfinder for Mains – Question 180

Q. With India nearing upper-middle-income status, the existing poverty line appears outdated. Examine the necessity of revising the poverty line and propose a suitable approach. (250 Words) (15 Marks)

Approach

Introduction: Provide a contextual introduction by mentioning the projection of the Indian economy.
Body: Discuss the need to adjust the poverty line and propose an appropriate method for its revision.
Conclusion: In conclusion, emphasis on the realistic, inclusive, and multidimensional poverty line for responsive governance.