New Delhi: A significant decline in rural poverty has been observed for the fiscal year 2024, with the poverty ratio falling below 5% for the first time, reaching 4.86%. In comparison, the poverty ratio stood at 7.2% in the previous fiscal year (2023), according to a report released by SBI Research on Friday. The report attributes this decline to a substantial increase in consumption growth, which has led to a reduction in the poverty line from a range of 5-10% in FY 2023 to 0-5% in FY 2024. Meanwhile, urban poverty saw a more modest decline, with the poverty ratio dropping from 4.6% to 4.09% during the same period.
Based on the findings from the latest Household Consumption Expenditure Survey (HCES), the report emphasizes that “improvements in physical infrastructure are driving a major transformation in rural mobility, reducing the income gap between urban and rural areas, and helping bridge income disparities within rural communities.”
Key Drivers of Rural Poverty Reduction
The report highlights that the reduction in rural poverty is largely due to government initiatives such as Direct Benefit Transfers (DBT), rural infrastructure development, and measures aimed at increasing farmers’ income. These efforts have had a positive impact on the living standards in rural areas. Around 30% of rural households’ monthly expenditure (MPCD) can be attributed to endogenous factors within the rural ecosystem, largely driven by government policies like DBT, rural infrastructure improvements, and initiatives to enhance farmers’ income and rural livelihoods.
Focus on Education and Healthcare for Continued Progress
Experts suggest that sustaining this positive trend requires a focus on enhancing rural education, healthcare services, and entrepreneurship. As rural India becomes more connected and economically active, addressing regional imbalances and ensuring balanced growth across states and districts will be crucial to maintaining this progress.
Revised Poverty Line Estimates
The SBI report also estimates new poverty lines for the fiscal year 2024. According to the report, the poverty line for rural areas is pegged at ₹1,632 per month, while for urban areas, it is set at ₹1,944 per month. In comparison, the Tendulkar Committee’s poverty line in 2011-12 was ₹816 per month for rural areas and ₹1,000 per month for urban areas.
These new poverty estimates have been adjusted for inflation and consumption patterns. However, some experts, including Professor R. Ramkumar from the Tata Institute of Social Sciences, have raised concerns about the reliability of these updated poverty lines, particularly in light of ongoing inflation and evolving socio-economic conditions.
Despite these concerns, the report reflects a promising reduction in rural poverty, signaling positive developments for India’s economy as it continues to tackle the challenges of inequality and poverty.
