Estimation of Poverty in India Based on New Global Poverty Threshold

The World Bank has declared a significant update to worldwide poverty metrics, elevating the International Poverty Line (IPL) from $2.15/day (2017 PPP) to $3.00/day (2021 PPP).

Although the change resulted in a worldwide rise of 125 million in extreme poverty, India experienced a significant decline in poverty.

What defines a Poverty Line?

A poverty line is a benchmark level of income or consumption utilized to identify if a person or household is considered poor.

Individuals living beneath this level are deemed unable to meet fundamental needs like food, housing, apparel, education, and medical care.

It assists the authorities;

• to assess the level of poverty and design social policies for the disadvantaged.
• to determine if a collection of policies has effectively succeeded in reducing poverty and enhancing wellbeing over time.

India’s Updated Poverty Overview

India’s recent Household Consumption Expenditure Survey (HCES) utilized the Modified Mixed Recall Period (MMRP) approach, replacing the old Uniform Reference Period (URP). This change:

Employed briefer recall intervals for items bought regularly.

Obtained more accurate assessments of true usage.

In 2011–12, the implementation of MMRP lowered India's poverty rate from 22.9% to 16.22%, even when considering the older $2.15 poverty threshold.

In 2022–23, poverty according to the new $3.00 threshold was 5.25%, whereas under the previous $2.15 threshold, it decreased to 2.35%.

Why is the World Bank’s Poverty Line used by India?

India officially revised its poverty line for the last time in 2011–12 (Tendulkar method).

In 2014, a committee chaired by C. Rangarajan suggested increased thresholds (₹47 for urban and ₹33 for rural/day), yet this recommendation was not implemented. Since that time:

India has not had a universally recognized poverty threshold.

Instead, NITI Aayog’s Multidimensional Poverty Index (MPI) and estimates from the World Bank have taken its place.

Government actions for poverty reduction

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): Assures 100 days of unskilled labor annually. Develops lasting resources in countryside regions.

National Food Security Act (NFSA), 2013: It provides a legal guarantee for 67% of the population (75% in rural regions and 50% in urban regions) to access heavily subsidized food grains.

Pradhan Mantri Ujjwala Yojana (PMUY) (2016): This program was launched to offer LPG (liquefied petroleum gas) connections to women from Below Poverty Line (BPL) households.

Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM): Its objective is to lessen poverty by allowing poor households to tap into productive self-employment and skilled wage job opportunities, leading to sustainable and varied livelihood options for the impoverished.

Ayushman Bharat scheme: It provides health insurance of up to ₹5 lakh annually for each family to protect beneficiaries from the financial strain of high medical expenses, thus stopping them from sinking further into poverty because of healthcare costs.

Final observations

India’s reduction in poverty is a narrative of technological advancement aligning with policy outcomes. Amid a higher poverty threshold, India demonstrated that more accurate data, rather than weakened criteria, can uncover genuine advancement.

With the global community readjusting its poverty objectives, India’s example establishes a benchmark: governance grounded in evidence, continuous reforms, and methodological rigor can collaboratively produce significant results.