How India's Poverty Reduction Sets a Global Benchmark Amid Rising Standards

A recent government report highlights India's significant strides in poverty reduction, showcasing improvements in living standards and income levels. The World Bank's revised poverty metrics reveal that India not only met the new International Poverty Line but also demonstrated a remarkable decline in poverty rates. This article explores how India's data-driven approach and methodological advancements have set a global benchmark for poverty alleviation, with all major states reporting increased consumption levels. Discover the implications of these findings and how they reflect on India's governance and reform strategies.
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How India's Poverty Reduction Sets a Global Benchmark Amid Rising Standards

Significant Progress in Poverty Reduction


New Delhi: According to a recent government factsheet, the World Bank's updated statistics confirm that poverty levels in India have not only decreased in numbers but also through significant enhancements in living conditions and income levels.


The narrative of India's poverty reduction illustrates how refined methodologies can yield effective policy outcomes. Despite a higher poverty threshold, the nation has shown that accurate data can highlight genuine advancements rather than merely adjusting standards.


As the international community revises its poverty targets, India's experience serves as a model: a combination of evidence-based governance, ongoing reforms, and methodological rigor can lead to transformative results, as stated in the factsheet.


The World Bank has revised its global poverty metrics, increasing the International Poverty Line (IPL) from $2.15 per day (2017 PPP) to $3.00 per day (2021 PPP).


This adjustment resulted in a global rise of 125 million in extreme poverty figures, yet India stood out positively in this context.


By employing more precise data and modern survey techniques, India not only met the new threshold but also showcased a substantial decline in poverty.


Had the new poverty line been applied universally, it would have raised the global extreme poverty count by 226 million. However, India's data revision contributed to a net increase of only 125 million globally, as its adjustments alone accounted for a reduction of 125 million.


The latest Household Consumption Expenditure Survey (HCES) in India utilized the Modified Mixed Recall Period (MMRP) approach, replacing the outdated Uniform Reference Period (URP).


This new method employed shorter recall periods for frequently purchased goods, yielding more accurate consumption estimates.


Consequently, national surveys indicated an increase in consumption, leading to lower poverty estimates.


In the 2011–12 period, the application of MMRP reduced India's poverty rate from 22.9% to 16.22%, even under the previous $2.15 threshold.


For the 2022–23 period, the poverty rate under the new $3.00 line was recorded at 5.25%, while it further decreased to 2.35% under the older $2.15 line.


In 2023–24, the average Monthly Per Capita Expenditure (MPCE) was Rs 4,122 in rural regions and Rs 6,996 in urban areas, excluding the value of items received through social welfare initiatives.


Including these benefits, the figures rose to Rs 4,247 and Rs 7,078, respectively, marking a significant increase from the rural MPCE of Rs 1,430 and urban MPCE of Rs 2,630 in 2011-12.


The gap in consumption between urban and rural households has narrowed from 84% in 2011–12 to 70% in 2023–24, indicating a decrease in disparities.


All 18 major states reported an increase in average MPCE for both rural and urban sectors. Odisha recorded the highest rural increase at approximately 14%, while Punjab noted the highest urban increase at around 13%.


According to the factsheet, the Gini coefficient, which measures consumption inequality, fell from 0.266 to 0.237 in rural areas and from 0.314 to 0.284 in urban areas between 2022–23 and 2023–24, indicating a reduction in consumption inequality across most major states.


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