Rama Krishna Sangem
Here’s a good news! Poverty declined faster in rural areas during FY24 as the poverty ratio dipped below 5 per cent for the first time, reaching 4.86 per cent from 7.2 per cent in FY23, according to a study by SBI Research released on January 3, Friday. In comparison, the poverty ratio in urban areas fell to 4.09 per cent from 4.6 per cent during the same period.
The report notes that this decline in the rural poverty ratio is due to higher consumption growth in the 0-5 per cent decile, leading to a shift in the poverty line from the 5-10 per cent decile in FY23 to the 0-5 per cent decile in FY24.
Enhanced physical infrastructure is scripting a new story in rural mobility [as it is] one of the reasons for the increasingly shrinking horizontal income gap between rural and urban areas and the vertical income gap within rural income classes,” the study by the government-run bank, based on the latest Household Consumption Survey (HCES) results, noted.
Further, the report also notes that another reason for the declining rural-urban gap was the rise in government scheme transfers, such as Direct Benefit Transfer (DBT).
“Around 30 per cent of the rural monthly per capita expenditure (MPCE) is explained by factors that are endogenous to the rural ecosystem. Such endogenous factors are mostly due to the initiatives the government has taken in terms of DBT transfers, building rural infrastructure, augmenting farmers’ income, and improving rural livelihoods significantly,” the report noted.
Adjusting for decadal inflation and the imputation factor in the poverty line fixed by Professor Suresh Tendulkar, the SBI report estimated the new poverty line for FY24 at Rs 1,632 for rural areas and Rs 1,944 for urban areas.
Earlier, in 2011-12, an expert group headed by Professor Tendulkar had estimated the poverty line at Rs 816 for rural areas and Rs 1,000 for urban areas. Separately, the report also mentions that the poverty rate in India could now be in the range of 4 per cent to 4.5 per cent.
“It is possible that these numbers could undergo minor revisions once the 2021 census is completed and a new rural-urban population share is published. We believe urban poverty could decline even further,” the report said.
Poverty line @ Rs 1,632 for rural & R%s 1,944 for urban areas
Separately, the report also mentions that the poverty rate in India could now be in the range of 4 per cent to 4.5 per cent. “It is possible that these numbers could undergo minor revisions once the 2021 census is completed and a new rural-urban population share is published. We believe urban poverty could decline even further,” the report said.
