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26th February 2024 (12 Topics)

India’s poverty level down to 5% of population

Context

NITI Aayog CEO has said India's poverty level has fallen to just five per cent, signalling an improvement in the nation's economic landscape.

Key Highlights

  • Data source: Latest consumer expenditure surveyconducted by the National Sample Survey Office (NSSO).
    • The survey categorised people into 20 different groups, revealing that the average per capita monthly expenditure in rural areas is Rs 3,773, while in urban areas, it stands at Rs 6,459.
  • The Survey revealed that per capita monthly household expenditure more than doubled in 2022-23 as compared to 2011-12.

Monthly per capita consumption expenditure (MPCE)

  •  In rural India, the share of cereal in total monthly per capita consumption expenditure (MPCE) has fallen to 4.89 per cent in 2022-23 as compared to 10.69 per cent in 2011-2012.
  • Cereal: The share of cereal substitutes has gone down to 0.02 per cent from 0.06 per cent during the same period.
  • Vegetables: At the same time, the spending on vegetables has reduced to 5.38 per cent from 6.62 per cent.
    • It must be noted that the share of most of these categories in total spending has been reducing since 2000 but it is for the first time that spending on beverages & processed food has crossed that of cereals.
  • The share of this category has gone up to 9.62 per cent from 7.90 per cent in 2011-12. This is despite the total food spending as a percentage of total spending in rural India falling from 52.9 per cent in 2011-12 to 46.38 per cent in 2022-23.
  • Some other categories, which saw higher spending percentages in rural India were dry fruits (1.17 per cent), egg, fish & meat (4.91 per cent), fruits (2.54 per cent) and milk & milk products (8.33 per cent).
  • The data indicates that poverty in India is now below five per cent.

The 2023 Multidimensional Poverty Index Report finds over a third of all poor people in the world live in South Asia—which is around 389 million people. India contributes significantly to this number, accounting for almost 70 percent of the increase in extreme poverty.

The trends

  • The consumption has surged by 2.5 times in both rural and urban areas, indicating progress across the board.
  • The gap is narrowing between rural and urban consumption, suggesting a positive trajectory towards economic parity.
  • There is the decline in the consumption of cereals and food items, indicating a shift towards a more prosperous lifestyle.
  • People are now allocating more income towards non-food items, such as milk, fruits, vegetables, and processed foods, reflecting increased prosperity and evolving consumption patterns.

What is Poverty?

India poverty rate over the years

Year

percent

1977

63.11

1983

56.26

1987

50.59

1993

47.64

2004

39.91

2009

32.87

2011

22.53

2015

18.73

2017

13.37

2018

11.09

2019

12.73

2020

14.72

2021

11.9

  • Poverty can be defined as a condition in which an individual or household lacks the financial resources to afford a basic minimum standard of living.
  • The World Bank defines poverty using the International Poverty Line, which designates extreme poverty at $2.15 per person per day, while $3.65 falls under the lower-middle income category, and $6.85 is classified as upper-middle income.

Types of Poverty:

  • Absolute Poverty: Lack of basic necessities like food, shelter, and healthcare, threatening survival.
  • Relative Poverty: Deprivation in comparison to the broader society, despite meeting basic needs.
  • Urban Poverty: Concentrated in urban areas, characterized by slums, unemployment, and inadequate living conditions.
  • Rural Poverty: Predominant in rural regions, often linked to agricultural challenges, low income, and limited access to services.
  • Cyclical Poverty: Temporary state due to economic fluctuations or personal circumstances.
  • Chronic Poverty: Persistent, long-term deprivation often linked to systemic issues and lack of opportunities.
  • Income Poverty: Lack of sufficient income to meet basic needs.
  • Multidimensional Poverty: Deprivation in various aspects, including education, health, and living standards.
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