India’s extreme poverty rate fell dramatically to 5.3 per cent, down from 27.1 per cent in 2011-12, despite the World Bank raising its global poverty line to $3 per day. Government data last year showed 24.82 crore people had escaped multidimensional poverty in the past nine years.

While a report by the State Bank of India (SBI) projects India’s poverty rate to fall to 4.6 per cent in 2024, an improvement from the World Bank’s estimate. This decline is attributed to new data collection methods, including the Modified Mixed Recall Period, which more accurately captures household consumption patterns.

However, experts warned that the country lacks an official estimate of poverty, highlighting the need to incorporate income or expenditure metrics in poverty measurement. The existing Multidimensional Poverty Index (MDPI), unlike the Human Development Index, fails to include income or expenditure measures, they noted.

Statistical decline

Given India’s inflation rate between 2017 and 2021, the World Bank noted a revised extreme poverty line of $3 per day will represent a more accurate picture. But despite this, the poverty rate has declined. This seems to be due to the use of the Household Consumption Expenditure Survey (HCES 2023–24) by the World Bank to arrive at its poverty estimate.

HCES 2023-24 adopted the Modified Mixed Recall Period (MMRP) method, replacing the Uniform Reference Period (URP). The MMRP method used different recall periods (7 days, one month, one year) for different items while the URP uses the same reference period for all items.

Application of MMRP reduced India’s poverty rate from 22.9 per cent to 16.22 per cent for 2011-12, even under the older $2.15 poverty line. In 2022–23, poverty under the new $3.00 line stood at 5.25 per cent, while under the older $2.15 line it dropped further to 2.35 per cent.

MDPI Index 

The finding by the World Bank coincides with the government data which showed that 24.82 crore people escaped multidimensional poverty in last nine years. The NITI Aayog’s discussion paper ‘Multidimensional Poverty in India Since 2005-06’ shows India has registered a significant decline in multidimensional poverty from 29.17 per cent in 2013-14 to 11.28 per cent in 2022-23, a reduction of 17.89 percentage points.

Dismissing the narrative that the rural economy is weak and India’s growth story is ‘restricted to a few people’, BVR Subrahmanyam, the Chief Executive Officer of the Centre’s think tank Niti Aayog, has highlighted last year that growth is “broad-based” with rural Indians’ incomes and spends rising faster than their urban peers.

Questions on claims  

Other researchers however differ on the extent of poverty in India. Sethu CA, Senior Research Assistant, Foundation for Agrarian Studies (FAS), Bengaluru, using the method proposed by the Expert Group (Rangarajan) stated that the poverty line in 2022–23 for rural areas was estimated to be ₹2,515 and ₹3,639 for urban areas. This resulted in an overall poverty head-count ratio of 26.4 per cent. Sethu and other researchers highlighted using a low poverty line threshold, that too in data that possibly contains an upward bias, adding that “we still found that more than one in four Indians lives in poverty.”

During an online panel discussion on “Measuring Poverty in India” last year Madhura Swaminathan, drew attention of not having any official estimate of poverty in India. She asserted the need for having an income or expenditure metric as part of any poverty estimation method. Measures like the Multi-Dimensional Poverty Index (MDPI), unlike the Human Development Index, she clarified, do not have any income or expenditure measure at all: “MDPI is entirely based on other indicators of housing, health, education, and so on. Those of us concerned with not just measuring poverty, but also the real problem of ending it, need to bring back the money metric in some way, even if not basing all our understanding on just using that.”

Published on June 10, 2025