“High growth and a sharp decline in inequality have combined to eliminate poverty in India at the PPP 1.9 poverty line,” the report said.
With rural poverty at 2.5 percent and urban poverty down to 1 percent, the report further states, “The Headcount Poverty Ratio (HCR) for the 2011 PPP$1.9 poverty line is 12.2 percent in 2011-2012 to 2 percent in 2022. -23, which corresponds to 0.93 percentage points (ppt) per year.”
What does the data show?
Growth: Since 2011-2012, real per capita consumption has increased by 2.9% per year (pa) – rural growth of 3.1% pa was significantly higher than urban growth of 2.6%.
Inequality: The report reports an “unprecedented” decline in inequality in both rural and urban areas. “The urban Gini (x100) fell from 36.7 to 31.9; the rural Gini fell from 28.7 to 27.0,” it said.
“India must move to a higher poverty line”
The report highlights the reduction in human resource ratio (HCR) and highlights the need for India to introduce a higher poverty line as it claims that with a low poverty line there is no major decline.
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“With extreme poverty almost eliminated, we argued in a previous article that India needs to move to a higher poverty line,” the report said.
“The decline in HCR for both poverty lines highlights this point as we see that there cannot be a large decline at the lower poverty line,” she added.
What do other reports say?
The above claims are supported by recent data from the World Poverty Clock, which shows that the poverty rate in India is around 2% and around 3.4 million people live in extreme poverty.
The CEO of Niti Aayog recently claimed that India's poverty rate could be close to 5%, citing robust rural consumer spending narrowing the gap with urban consumer spending.
“Based on this data, the poverty rate in the country could be closer to 5% or less,” BVR Subrahmanyam said, adding that rural disadvantage has almost disappeared, according to the data.
A report by SBI also claims that poverty in India is between 4.5% and 5%.
What does the report say about household consumption spending?
The recently released data shows significant shifts in household consumption expenditure in rural and urban areas, showing that monthly per capita rural consumption expenditure at current prices increased by 164% from Rs 1,430 in 2011-12 to Rs 3,773 in increased in 2022-23. In urban centers, it increased by 146%, from Rs 2,630 in 2011-12 to Rs 6,459 in 2022-23.
Decline in spending on food while increasing spending on non-food items
According to the survey, in rural areas, the share of food in monthly consumption fell from 53% in 2011-12 to 46.4% in 2022-23, while expenditure on non-food items fell from 47.15 to 54 % have increased. The same trend was seen in urban centers, with food spending slowing from 43% in 2011 to 2022 to 39.2% in 2022-23, while non-food spending slowed from 57.4% in 2022 to 2022 2011 to 2012 increased to 60.8% in 2022 to 23.
This is the first consumer spending survey published since 2011-12. The government was criticized for not releasing the 2017-18 report as it purportedly revealed that consumer spending had fallen for the first time in four decades
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