India’s Poverty Rate Set To Hit Historic Low Of 4.6% In 2024: SBI

India’s latest Household Consumption Expenditure Survey (HCES) has implemented the Modified Mixed Recall Period (MMRP), replacing the older Uniform Reference Period (URP) method

The SBI report attributes this steady decline in poverty to a combination of economic reforms

Source : Pexels

India is poised to see a further reduction in poverty levels, with the poverty rate expected to fall to 4.6 per cent in 2024, according to a new report by the State Bank of India (SBI). This forecast marks a noticeable decline from the 5.3 per cent estimated by the World Bank for 2023.

“Poverty estimates by SBI and World Bank are remarkably similar.... SBI estimates it at 4.6 per cent in 2024...down from 5.3 per cent in 2023 as estimated by World Bank,” the report stated, underlining the alignment in figures between the two institutions.

New Survey Methods Drive Accuracy

A significant factor contributing to this decline is the adoption of improved data collection techniques. India’s latest Household Consumption Expenditure Survey (HCES) has implemented the Modified Mixed Recall Period (MMRP), replacing the older Uniform Reference Period (URP) method. The MMRP system uses shorter recall periods for frequently purchased items, leading to a more realistic representation of household consumption patterns.

This change has directly impacted poverty estimates. For example, in 2011-12, applying the MMRP method reduced the estimated poverty rate from 22.9 per cent to 16.22 per cent when measured against the previous poverty benchmark of USD 2.15 per day.

Impact of Global Poverty Line Revision

In a broader context, the World Bank’s recent adjustment of the global poverty threshold—from USD 2.15 (2017 PPP) to USD 3.00 (2021 PPP)—resulted in an initial increase in the worldwide extreme poverty count by 226 million people. However, India’s updated consumption data presented a contrasting trend. The country’s revised figures actually led to a reduction in global poverty estimates by 125 million, making it a positive outlier globally.

According to the 2022-23 data, India’s poverty level was recorded at 5.25 per cent under the new USD 3.00/day line, and even lower at 2.35 per cent under the previous USD 2.15/day line.

Reforms And Welfare Schemes Show Results

The SBI report attributes this steady decline in poverty to a combination of economic reforms, effective welfare policies, and enhanced data accuracy. The report concludes that India’s progress in poverty alleviation is not only significant at the national level but also contributes positively to global poverty reduction efforts.