Jan 5 – India has witnessed a sharp decline in poverty rates over the past decade, with rural poverty falling dramatically to 4.86% in 2023-24 from 25.7% in 2011-12, according to an SBI Research report released on Friday. Urban poverty also dropped to 4.09%, down from 4.6% during the same period.
“At an aggregate level, we believe poverty rates in India could now be in the range of 4%-4.5%, with almost minimal existence of extreme poverty,” the report stated.
The report attributes the significant reduction in rural poverty to higher consumption growth among the lowest income deciles, supported by robust government initiatives. Programs such as Direct Benefit Transfers (DBT), enhanced rural infrastructure, and efforts to boost farmer incomes have significantly improved rural livelihoods.
“Change in food prices has a significant impact on not just food expenditures but overall consumption, particularly in lower-income groups,” the report noted.
The difference between rural and urban monthly per capita consumption expenditure (MPCE) has narrowed significantly, declining from 88.2% in 2009-10 to 69.7% in 2023-24, reflecting the impact of improved rural mobility and infrastructure.
Enhanced connectivity through projects such as the Pradhan Mantri Gram Sadak Yojana (PMGSY), which has built over 700,000 km of rural roads, and 150,000 km of 4/8 lane national highways has transformed consumption patterns. Rural areas are now catching up with urban centers in terms of access to goods, services, and income opportunities.
States like Bihar and Rajasthan, once considered laggards, have shown the greatest improvement in reducing the rural-urban disparity. Consumption behavior in both rural and urban areas has also shifted towards non-food items, reflecting a higher standard of living and increased demand for manufactured goods like toiletries and clothing.
The report based its poverty estimates on a revised poverty line of ₹1,632 for rural areas and ₹1,944 for urban areas, adjusted for inflation and consumption patterns since 2011-12. The poverty ratio for rural areas was estimated at 4.86%, and 4.09% for urban areas in 2023-24, compared to 7.2% and 4.6% respectively in 2022-23.
The study noted that states with higher outward migration, such as Uttar Pradesh and Bihar, still show low savings rates compared to high-income states, where savings exceed the national average of 31%.
Government schemes and infrastructure projects have fundamentally altered rural consumption dynamics, with around 30% of rural MPCE attributed directly to public initiatives. Improved connectivity and transportation have not only enhanced access to markets but also reshaped buying and selling patterns, fostering prosperity in previously underserved areas.
While rural consumption is rapidly catching up, the report acknowledges challenges such as the impact of food inflation, particularly in lower-income states, which dampens demand more than in wealthier regions.
The findings reflect India’s ongoing progress in addressing rural poverty through strategic investments in infrastructure, social welfare, and economic inclusion, marking a significant step towards bridging the rural-urban divide.
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