- 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.
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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capita income has tripled from ₹71,610 (2011–12) to ₹1,88,892 (2023–24) (PIB), rendering decade-old poverty benchmarks outdated and misaligned with current costs.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.
