Poverty in India

Poverty in India remains a major challenge despite overall reductions in the last several decades as its economy grows. According to an International Monetary Fund paper, extreme poverty, defined by the World Bank as living on US$1.9 or less in purchasing power parity (PPP) terms, in India was as low as 0.8% in 2019, and the country managed to keep it at that level in 2020 despite the unprecedented COVID-19 outbreak.^[1][2] According to the World Bank, India experienced a significant decline in the prevalence of extreme poverty from 22.5% in 2011 to 10.2% in 2019. A working paper of the bank said rural poverty declined from 26.3% in 2011 to 11.6% in 2019. The decline in urban areas was from 14.2% to 6.3% in the same period. The poverty level in rural and urban areas went down by 14.7 and 7.9 percentage points, respectively.^[3] According to United Nations Development Programme administrator Achim Steiner, India lifted 271 million people out of extreme poverty in a 10-year time period from 2005–2006 to 2015–2016. A 2020 study from the World Economic Forum found "Some 220 million Indians sustained on an expenditure level of less than Rs 32 / day—the poverty line for rural India—by the last headcount of the poor in India in 2013."^[4]

The World Bank has been revising its definition and benchmarks to measure poverty since 1990–1991, with a $0.2 per day income on purchasing power parity basis as the definition in use from 2005 to 2013.^[5] Some semi-economic and non-economic indices have also been proposed to measure poverty in India. For example, in order to determine whether a person is poor, the Multi-dimensional Poverty Index places a 33% weight on the number of years that person spent in school or engaged in education and a 6.25% weight on the financial condition of that person.^[6]

The different definitions and underlying small sample surveys used to determine poverty in India have resulted in widely varying estimates of poverty from the 1950s to 2010s. In 2019, the Indian government stated that 6.7% of its population is below its official poverty limit.^[7] Based on 2019's PPPs International Comparison Program,^[8][9][10] According to the United Nations Millennium Development Goals (MDG) programme, 80 million people out of 1.2 billion Indians, roughly equal to 6.7% of India's population, lived below the poverty line of $1.25 ^[11] and 84% of Indians lived on less than $6.85 per day in 2019.^[12] According to the second edition of the Multidimensional Poverty Index (MPI) released by Niti Aayog, approximately 14.96% of India's population is considered to be in a state of multidimensional poverty.^[13] The National Multidimensional Poverty Index (MPI) assesses simultaneous deprivations in health, education, and standard of living, with each dimension carrying equal weight. These deprivations are measured using 12 indicators aligned with the Sustainable Development Goals (SDGs).^[14] On July 17, 2023, Niti Aayog reported a significant reduction in the proportion of poor people in the country, declining from 24.8% to 14.9% during the period from 2015–16 to 2019–21. This improvement was attributed to advancements in nutrition, years of schooling, sanitation, and the availability of subsidized cooking fuel.^[15] As per the report, approximately 135 million people in India were lifted out of multidimensional poverty between 2015–16 and 2019–21.^[16]

From the late 19th century through the early 20th century, under the British Raj, poverty in India intensified, peaking in the 1920s.^[17][18] Famines and diseases killed millions in multiple vicious cycles throughout the 19th and early 20th centuries.^[19][20] After India gained its independence in 1947, mass deaths from famines were prevented.^[21] Since 1991, rapid economic growth has led to a sharp reduction in extreme poverty in India.^[22][23] However, those above the poverty line live a fragile economic life.^[24] As per the methodology of the Suresh Tendulkar Committee report, the population below the poverty line in India was 354 million (29.6% of the population) in 2009–2010 and was 269 million (21.9% of the population) in 2011–2012.^[25] In 2014, the Rangarajan Committee said that the population below the poverty line was 454 million (38.2% of the population) in 2009–2010 and was 363 million (29.5% of the population) in 2011–2012.^[26] Deutsche Bank Research estimated that there are nearly 300 million people who are in the middle class.^[27] If these previous trends continue, India's share of world GDP will significantly increase from 7.3% in 2016 to 8.5% by 2020.^[28] In 2012, around 170 million people, or 12.4% of India's population, lived in poverty (defined as $1.90 (Rs 123.5)), an improvement from 29.8% of India's population in 2009.^[29][30] In their paper, economists Sandhya Krishnan and Neeraj Hatekar conclude that 600 million people, or more than half of India's population, belong to the middle class.^[31]

The Asian Development Bank estimates India's population to be at 1.28 billion with an average growth rate of 1.3% from 2010 to 2015. In 2014, 9.9% of the population aged 15 years and above were employed. 6.9% of the population still lives below the national poverty line and 63% in extreme poverty (December 2018)^[32] The World Poverty Clock shows real-time poverty trends in India, which are based on the latest data, of the World Bank, among others. As per recent estimates, the country is well on its way of ending extreme poverty by meeting its sustainable development goals by 2030.^[33] According to Oxfam, India's top 1% of the population now holds 73% of the wealth, while 670 million citizens, comprising the country's poorest half, saw their wealth rise by just 1%.^[34]