Extreme poverty has been eradicated in India, says report

India has successfully eradicated extreme poverty, indicatesa commentary penned by economists Surjit Bhalla and Karan Bhasin in The Brookings Institution, a prominent American think-tank.

The assertion is based on the recently disclosed consumption expenditure data for the year 2022-23, revealing a notable annual growth of 2.9 per cent in real per capita consumption since 2011-12.

Notably, rural areas experienced a significantly higher growth rate of 3.1 per cent compared to urban areas at 2.6 per cent.

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The commentary highlights an unprecedented decline in both urban and rural inequality, with the Gini coefficient reflecting substantial reductions – from 36.7 to 31.9 in urban areas and from 28.7 to 27.0 in rural areas. The Gini coefficient measures income distribution inequality, with a higher value indicating greater disparity.

The economists assert that the combination of robust economic growth and substantial reduction in inequality has effectively eliminated poverty in India.

This conclusion is supported by the decline in the Headcount Poverty Ratio (HCR), which dropped from 12.2 per cent in 2011-12 to 2 per cent in 2022-23, equivalent to an annual decrease of 0.93 percentage points.

Rural poverty now stands at 2.5 per cent, while urban poverty has diminished to 1 per cent.

The commentary acknowledges that these estimates do not consider government-supplied free food (wheat and rice) to approximately two-thirds of the population, along with the utilisation of public health and education services.

The authors underline the remarkable pace of poverty reduction, noting that a similar decline in the past took 30 years, whereas the current achievement occurred over just 11 years.

With extreme poverty nearly eradicated, the economists propose that India should now reassess its poverty line, providing an opportunity to redefine social protection programmes.

They argue for a higher poverty line to better identify intended beneficiaries and offer increased support to those genuinely in need.

The commentary concludes by affirming that official data confirms India's elimination of extreme poverty, a significant milestone with positive implications for global poverty rates.

(With inputs from agencies)