India has officially eradicated extreme poverty, as indicated by a recent report authored by economists Surjit Bhalla and Karan Bhasin. The report highlights a significant decrease in the headcount poverty ratio and a notable rise in household consumption across the country.
According to the authors, this achievement signals the need for India to recalibrate its poverty line, aligning it with international standards. They emphasize the importance of revising social protection programs to better target and support those in genuine need.
The success in combating extreme poverty is attributed to the government's robust policies on redistribution, fostering inclusive growth throughout the past decade. The latest official consumption expenditure data for 2022-23 underscores this progress, offering the first survey-based poverty estimates in over a decade.
The data reveals a commendable annual real per capita consumption growth rate of 2.9 percent since 2011-12, with rural areas experiencing even higher growth at 3.1 percent compared to urban areas at 2.6 percent. Moreover, there has been an unprecedented reduction in both urban and rural inequality, with Gini coefficients declining significantly.
Contrary to previous estimates by the World Poverty Clock, which indicated millions living in extreme poverty, the report showcases a substantial decline in poverty rates. The Headcount Poverty Ratio (HCR) for the 2011 PPP USD 1.9 poverty line plummeted from 12.2 percent in 2011-12 to a mere 2 percent in 2022-23.
Rural poverty now stands at 2.5 percent, while urban poverty has dropped to 1 percent. Even for the PPP USD 3.2 line, the HCR has declined significantly from 53.6 percent to 20.8 percent.
However, it's essential to note that these estimates do not factor in government-supplied free food or public health and education services, which are crucial components of poverty alleviation efforts.
The authors attribute the relatively higher consumption growth in rural areas to the government's focused efforts on redistribution through various publicly funded programs.
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