Study Calls for Urgent Revision of India's Poverty Measurement Framework to Reflect Rising Living Standards

Study Calls for Urgent Revision of India's Poverty Measurement Framework to Reflect Rising Living Standards

A recent study compares data from the 2022-24 Household Consumer Expenditure Survey with that of 2011-12, shedding light on changes in poverty and inequality levels in India.

Key Findings:

• Poverty Headcount Ratio (HCR): The poverty rate at the $1.90 PPP (Purchasing Power Parity) poverty line has dropped from approximately 12% in 2011-12 to just 1% in 2023-24.

  • Poverty HCR refers to the percentage of the population living below the defined poverty line.

• Poorest Households: These households have experienced significantly higher growth in consumption expenditures compared to wealthier households.

• Outdated Poverty Lines: The current official poverty lines, based on the Tendulkar and Rangarajan methodologies, are outdated and do not adequately reflect current levels of deprivation.

Proposed New Poverty Thresholds:

1. Relative Poverty Line Based on the 33rd Percentile of Consumption: Instead of a fixed poverty line, poverty is defined based on the consumption levels of the bottom 33% of the population.

2. Relative Poverty Line Based on Income: Similar to Europe’s approach, poverty is defined as 60% of the median income (the middle income level when all incomes are ranked). Applying this to India, 16.5% of the population fell below this threshold in 2023-24.

Significance of the New Poverty Lines:

• These new thresholds better reflect current consumption patterns and address existing deprivation.
• They allow for automatic adjustments in poverty levels as the economy grows.
• The revised approach provides a more accurate and relevant measure of poverty in modern India.

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