Poverty line in India: A report released by State Bank of India last week has claimed a significant decline in the rural poverty ratio. This improvement is attributed to enhanced physical infrastructure, higher consumption growth among the bottom fractile, and the impact of direct benefit transfers. The claims have sparked concerns regarding their accuracy, highlighting the need for more comprehensive approaches to calculating destitution. The metrics for the same should not serve as tools for generating optimistic headlines—they are vital for evaluating a country’s genuine economic progress.
Such measurements in India are contentious due to their impact on public policy, resource allocation, and political narratives. Benchmarks like the Tendulkar poverty line are criticised for underestimating destitution by focusing on survival needs rather than broader aspects like education and healthcare. Governments often face accusations of manipulating metrics to present a favourable economic outlook, while experts call for more realistic approaches that reflect evolving realities, ensuring these debates remain highly charged.
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SBI’s methodology fundamentally flawed
SBI based its findings on the latest Household Consumption Expenditure Survey (HCES) for August 2023–July 2024. The report states that rural destitution dropped to 4.86% in FY24 from 7.2% in FY23, while urban destitution declined to 4.09% from 4.6% during the same period. The poverty lines were pegged at Rs 1,632 for rural areas and Rs 1,944 for urban areas. These estimates were derived by adjusting the 2011 poverty line set by the Suresh Tendulkar Committee for inflation and incorporating an imputation factor.
However, many economists have criticised this methodology as fundamentally flawed. They argue that the Tendulkar poverty line is a destitution line rather than a true destitution line. A destitution line identifies individuals living in extreme deprivation, unable to meet basic survival needs. It does not encompass broader dimensions of poverty, such as access to education, healthcare, and amenities. By relying on this outdated benchmark and merely adjusting it for inflation, the SBI report risks underestimating the actual extent of poverty.
Evolving consumption patterns
Consumption patterns in India have changed significantly over the years. The Tendulkar Committee’s methodology, based on consumption baskets from over a decade ago, no longer reflects contemporary realities. To present an accurate picture, a complete recalibration of the destitution line is necessary. This recalibration should adhere to the principles of the Tendulkar Committee while using updated data that considers current consumption and expenditure trends.
The inadequacy of the current method becomes evident when we examine the daily destitution lines estimated at just Rs 55 per day for rural areas and Rs 65 per day for urban areas in 2023–24. Such figures are not only unrealistic but could also be seen as an intentional move to project a rosier image of poverty reduction. Former chief statistician Pronab Sen has criticised the continued use of outdated norms, calling it a blow to the credibility of such assessments.
Multidimensional poverty: An incomplete picture
This is not the first time that destitution statistics have come under scrutiny. In January 2024, a NITI Aayog report claimed that 248 million Indians escaped multidimensional poverty over the past nine years, reducing the share of people living in such conditions from 295 million to just 11%. The government has also set an ambitious target to bring multidimensional poverty below 1%.
While the Multidimensional Poverty Index (MPI) considers factors like health, education, and living standards, it overlooks the devastating impact of COVID-19 on destitution levels. Moreover, MPI findings fail to address traditional measures of destitution based on consumption expenditure. Critics highlight a disconnect between reported poverty reduction and the realities of the labour market, where low wages remain widespread, indicating higher destitution levels than officially acknowledg
Poverty line in India versus global standards
To ensure destitution metrics serve policy needs effectively, India must update its poverty line and align it with international standards. While the Rangarajan Committee recommended a revised line higher than Tendulkar’s, its suggestions were never officially adopted. Meanwhile, the Multidimensional Poverty Index also failed to replace the Tendulkar benchmarks.
The international destitution line, based on purchasing power parity (PPP), offers a globally recognised standard to compare living conditions. Set at $1.90 or $2.15 per day in 2017 PPP terms, it defines extreme destitution more comprehensively than India’s current metrics. Some experts, like Max Roser of the University of Oxford, have even called for raising this threshold to $30 per day to make global poverty’s true scale more visible. Such recalibrations could better capture the challenges of affording housing, transport, and nutritious food.
India has undeniably made progress in destitution alleviation, but questions remain about its extent. For destitution numbers to drive effective policymaking, the government must adopt methods that reflect both domestic realities and global standards. Accurate poverty measurements are critical not only for estimating beneficiaries of welfare schemes but also for designing targeted interventions to alleviate suffering.
Poverty is a dynamic challenge. Whether through recalibrating existing metrics or adopting new ones like a revised MPI or international destitution lines, India must ensure its measurements are robust, inclusive, and reflective of contemporary realities. Only then can destitution figures serve as a true barometer of progress and inform policies aimed at a more equitable future.