A significant decline in India's extreme poverty rate has been reported, with new research indicating a drop from 21.9% to just 2.3% over a 12-year period. This substantial reduction, detailed in a paper co-authored by Columbia University professor and Sixteenth Finance Commission Chairman Arvind Panagariya and Intelink Advisors founder Vishal More, suggests that hundreds of millions of people have been lifted out of poverty.
Key Findings on Poverty Reduction
The paper, titled ‘Poverty and Inequality in India, 2011–12 to 2023–24’ and published in the Economic & Political Weekly (EPW), utilized unit-level Household Consumption Expenditure Survey data to assess poverty and inequality across India. The findings highlight a sharp decrease in extreme poverty, with similar improvements observed across various states and social groups, though Scheduled Tribes still face relative disadvantages.
Using the Tendulkar Poverty Line (TPL) as a benchmark, the study employed two distinct approaches to quantify the number of individuals who escaped poverty:
- Approach 1: By comparing population size with corresponding poverty rates, this method estimates that 234 million individuals were lifted out of poverty at the TPL. At higher expenditure thresholds (1.25×TPL and 1.75×TPL), the numbers rose to 394 million and 421 million, respectively.
- Approach 2: Applying 2011–12 poverty rates to the 2023–24 population, this method yields an even larger estimate of 273 million people exiting poverty at the TPL, demonstrating a 16.7% increase over the first approach.
Declining Expenditure Inequality
Beyond poverty reduction, the research also points to a likely decrease in expenditure inequality across India. The Gini coefficient, a key measure of distribution, showed a steady decline nationally and across states. Specifically, the all-India Gini coefficient fell from 35.1% in 2011–12 to 31.7% in 2022–23, further dropping to 29.1% in 2023–24. This trend was consistent in both rural and urban areas, with urban inequality registering particularly significant reductions.
Broader Implications of Growth
The authors emphasized that the overall growth observed during this period appears to be broadly inclusive, combining falling poverty with reduced expenditure inequality. They noted that no Indian state or union territory currently reports a poverty rate in double digits, and some regions like Himachal Pradesh, Sikkim, Goa, Chandigarh, Delhi, and Daman and Diu have seen their poverty rates decline to zero (up to the first decimal point).
Panagariya and More asserted that India provides a clear example of substantial poverty reduction achieved through sustained economic growth within a democratic framework. They concluded, “This wide and deep decline in poverty underscores that there is no single antidote to poverty other than sustained economic growth. The common refrain that growth benefits only the already affluent deserves to be firmly set aside.”