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India's Extreme Poverty Rate Drops to 5.3% with World Bank’s $3-a-Day Benchmark

India has experienced a substantial decline in extreme poverty, with the rate falling to 5.3% in 2022-23 under the World Bank’s revised poverty line of $3 per day, down from 27.1% in 2011-12. The number of people in extreme poverty reduced from 344 million to 75 million. Poverty rates across rural and urban areas and multidimensional poverty indices also show marked improvements. Updated 2023-24 poverty data will be released in October.

India's Extreme Poverty Rate Drops to 5.3% with World Bank’s $3-a-Day Benchmark

Significant Decline in Extreme Poverty in India

India has witnessed a remarkable reduction in extreme poverty rates, according to data aligned with the World Bank's updated poverty threshold. The global institution raised the extreme poverty line from $2.15 to $3 per day, adjusting for inflation in 2021 prices. Under this revised benchmark, India’s extreme poverty rate fell sharply from 27.1% in 2011-12 to just 5.3% in 2022-23.

In absolute terms, the number of people living under this $3 per day threshold dropped from approximately 344.5 million to 75.2 million during this period.

Comparative Poverty Lines and Adjustments

Using the previous extreme poverty line of $2.15 per day (2017 prices), the rate was even lower, at about 2.3% in 2022-23, down from 16.2% in 2011-12. This translated to roughly 33.7 million people living below that earlier benchmark.

Domestic inflation adjustments from 2017 to 2021 suggest a comparable poverty threshold of approximately $2.60 per day, still lower than the new $3 per day line.

Lower-Middle-Income Poverty Line Trends

The poverty rate for the lower-middle-income category (LMIC) benchmark also declined significantly. The threshold was raised from $3.65 to $4.20 per day (both adjusted to 2021 prices). Under this category, the poverty rate decreased from 57.7% in 2011-12 to 23.9% in 2022-23, with numbers falling from roughly 732 million to 342 million.

Interestingly, when adjusted for domestic inflation, the revised $4.20 line represents a slightly lower real threshold compared to the inflation-adjusted earlier $3.65 line (around $4.40), contributing to the observed reduction in poverty rate despite the increased dollar amount.

Urban and Rural Poverty Improvements

Disaggregating the data shows that rural poverty under the $3.65/day line declined from 69% to 32.5%, while urban poverty dropped from 43.5% to 17.2% between 2011-12 and 2022-23.

Educational attainment also correlates with poverty levels: in 2022-23, about 35.1% of individuals aged over 16 without any schooling lived below the poverty line, compared to 14.9% for those with post-secondary education.

Non-Monetary Poverty and Consumption Growth

The multidimensional poverty index (MPI), which accounts for income, education, water access, sanitation, and electricity, reflects notable improvements. India's MPI fell from 53.8% in 2005-06 to 15.5% in 2022-23.

Separate official estimates indicate a reduction in multidimensional poverty from 29.17% in 2013-14 to 11.28% in 2022-23.

Household consumption data further supports rising living standards. Adjusted for 2011-12 prices, average rural monthly consumption per person climbed by 45.4% to Rs 2,079 in 2023-24, while urban consumption grew by 38%, reaching Rs 3,632.

Looking Ahead: Upcoming Poverty Data

The next set of poverty statistics for 2023-24 is expected to be released in October through the Poverty and Inequality Platform (PIP). These figures will offer updated insights into the country’s socio-economic progress.

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