At an aggregate level, he assessed that poverty rates in India could now be in the range of 4 per cent-4.5 per cent with almost minimal existence of extreme poverty
There has been a remarkable decline in rural poverty, which according to the Consumption Expenditure Survey, is estimated at 4.86 per cent in FY24 (7.2 per cent in FY23 and 25.7 per cent in FY12), said SBI’s economic research department (ERD).
Further, urban poverty has been estimated at 4.09 per cent (4.6 per cent in FY23 & 13.7 per cent in 2011-12).
“Overall poverty levels now in 4-4.5 per cent…. The sharp decline in rural poverty ratio is on account of higher consumption growth in the lowest 0-5 per cent decile with significant Government support.
“Such support is important as we also find that change in food prices has significant impact on not just food expenditures, but overall expenditure in general,”said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.
Ghosh believes that urban poverty could decline even further. At an aggregate level, he assessed that poverty rates in India could now be in the range of 4 per cent-4.5 per cent with almost minimal existence of extreme poverty.
The ERD economists observed that starting with 2011-12 (based on MRP consumption) the poverty line estimate was ₹816 in rural area and ₹1000 in urban area. So, the new estimated poverty line (adjusted for decadal inflation and imputation factor derived from NSSO report) is ₹1632 in rural area and ₹1944 in urban areas in 2023-24.
“Enhanced physical infrastructure is scripting a new story in rural mobility…it one of the reasons for the increasingly shrinking horizontal income gap between rural and urban and the vertical income gap within rural income classes,” said ERD’s “Ecowrap” report.
SBI Economists assessed that the difference between rural and urban monthly per capita consumption expenditure/MPCE to rural MPCE is now at 69.7 per cent, a rapid decline from 88.2 per cent in 2009-10…
This is mostly due to the initiatives the Government has taken in terms of DBT (direct benefit transfers), building rural infrastructure, augmenting farmer’s income, improving the rural livelihood significantly.
The ERD estimated that food inflation dampens consumption demand more in lower income states as compared to higher-income states, reflecting that rural people are comparatively more risk-averse in low-income states, than in high-income states.
It estimated that the November 2024 inflation, because of the new weights, would be 5 per cent against 5.5 per cent.
The ERD noted that most of the high-income states delineate a savings rate greater than National Average (31%). Uttar Pradesh and Bihar show low savings rate possibly due to higher outward migration, it added
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