SBI Research Shows Decline in Poverty

Source: SBI Report
GS III: Indian Economy

Overview

Why in the News?

SBI research revealed a sharp decline in rural poverty.

The report attributes the sharp reduction in rural poverty to increased consumption growth among the lowest-income groups, bolstered by robust government support.
The sharp decline in the rural poverty ratio is on account of higher consumption growth.
Change in food prices has a significant impact on not just food expenditures, but overall expenditure in general.

Rural poverty in India has witnessed a significant decline, dropping to 4.86 per cent in FY24, compared to 25.7 per cent in 2011-12.
It is largely driven by government support initiatives, according to an SBI research report.
Urban poverty has also decreased sharply, now estimated at 4.09 per cent, down from 13.7 per cent in 2011-12.

Ministry of Statistics & Programme Implementation recently released a Household Consumption Expenditure Survey.

Figures could undergo minor revisions after the 2021 Census is completed, which may provide updated rural-urban population ratios.
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.
Major Reason
- Enhanced physical infrastructure is scripting a new story in Rural Mobility.
- Augmenting farmer’s income
- DBT transfers
The new estimated poverty line
- The new estimated poverty line is Rs 1632 in rural areas and Rs 1944 in urban areas in 2023-24.
- Earlier Rs 816 in a rural area and Rs 1000 in an urban area.
Monthly Per Capita Consumption Expenditure
- Most of states the incremental rural MPCE is less than the incremental urban MPCE.
- Situation is contrarian in a few states (like Karnataka, AP and Haryana).
Besides A significant drop (more than 5%) in ‘Cereal & Pulses’ consumption both in rural and urban areas.

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