Poverty in India

• 13 Dec 2025

For Prelims: Poverty, World Bank, Gini index,  Ayushman Bharat, and POSHAN Abhiyan, and Samagra Shiksha

For Mains: Poverty  trends in India, Equity, distributive justice and inclusive development.

Source:IE

Why in News? 

A new research paper by Arvind Panagariya, Chairman of the 16th Finance Commission, finds that India has “virtually eliminated” extreme poverty between 2011–12 and 2023–24.

Summary

• India has seen a steep fall in poverty, with extreme poverty dropping to about 2%, alongside major gains across social and religious groups. 
• The rising consumption, stronger welfare systems, and broad rural improvements have aided in decline in poverty.

What are the Key Highlights of the Study on Poverty?

• Extreme Poverty Nearly Eliminated: Poverty fell from 21.9% to 2.3% between 2011–12 and 2023–24, indicating near-elimination of extreme poverty driven by rising consumption and better access to welfare, nutrition, and basic services.
• Poverty Declined Across all Social Groups:  SCs, STs, OBCs and FCs all saw major reductions, with ST poverty dropping to 8.7%, though remaining higher than other groups.
• Religious poverty gaps have sharply narrowed, with Muslims now recording slightly lower rural poverty than Hindus, reversing the common perception of higher Muslim poverty.
• Faster Reduction in Rural Areas: Rural poverty declined by 22.5 percentage points, outpacing urban reduction of 12.6 points due to stronger welfare and consumption growth.
• Near-Zero Poverty: Himachal Pradesh, Sikkim, Goa, Delhi, Chandigarh, and Daman & Diu recorded poverty levels close to zero.

What is Poverty?

• Poverty: According to the World Bank, poverty is “pronounced deprivation in well-being.” The poor are those who do not have sufficient income or consumption to rise above an adequate minimum threshold.
  • The international poverty line, which is used to measure extreme poverty in low-income economies, is set at USD 3.00 per person per day (based on 2021 purchasing power parity).
  • According to NITI Aayog, poverty is measured by setting a poverty line (the minimum expenditure needed to meet basic socially acceptable needs) and the poverty ratio denotes the share of the population living below this line.
• Poverty Estimation in India:
  • Post-Independence: The Planning Commission (1962) initiated an official poverty assessment. 
    • Later committees like Alagh Committee (1979) and Lakdawala Committee (1993) refined the methodology, focusing on consumption expenditure and calorie norms.
  • Tendulkar Committee (2009): Shifted from calorie-based norms, recommended a uniform all-India Poverty Line Basket (PLB), and adopted Mixed Reference Period (MRP) consumption data. 
    • It estimated the 2011–12 poverty line at Rs 816 (rural) and Rs 1,000 (urban) per capita per month.
  • Rangarajan Committee (2014): Formed after criticism of the Tendulkar method, it reverted to separate rural and urban PLBs, estimating Rs 972 (rural) and Rs 1,407 (urban) per capita per month. 
    • However, the government did not adopt its recommendations officially.
• Multidimensional Poverty Index (MPI):  Launched in 2010 by United Nations Development Programme and Oxford Poverty & Human Development Initiative (OPHI), the MPI measures poverty beyond income, considering deprivations in health, education, and living standards. 
  • It reflects both the proportion of poor people and the average number of deprivations they experience simultaneously.
• National Multidimensional Poverty Index (NMPI): NITI Aayog uses National Family Health Survey (NFHS) to measure the NMPI.
  • The multidimensional poverty in India has declined from 29.17% in 2013-14 to 11.28% in 2022-23 with about 24.82 crore people escaping poverty.
  • The Gini index declined from 28.8 in 2011-12 to 25.5 in 2022-23, showing reduced inequality.

Type of Poverty	Definition
Extreme Poverty	Defined as surviving on less than USD 3.00 per person per day at 2021 purchasing power parity.
Relative Poverty	Poverty measured in relation to the economic status of society.
Multidimensional Poverty (MPI)	Considers multiple deprivations in health, education, and living standards, not just income.
Consumption-based Poverty	Measured using household consumption expenditure.

What are the Factors Contributing to Poverty in India? 

• P – Persistent Inequality: Income concentration remains high, the top 10% hold 57% of national income, leaving fewer resources and opportunities for low-income households to improve their living standards.
• R – Rural Economic Dependence: Agriculture employs 46% of India’s workforce but contributes only 18% to GDP, creating widespread underemployment and low earnings.
• E – Education & Skill Deficits: The ASER report 2024 notes that 50% of Class 5 students are not able to read Class 2 text, limiting future income mobility.
• S – Social Exclusion: According to the World Inequality Report 2022, women earn only 18% of labour income, and female labour force participation remains around 31%, reflecting deep social and economic barriers.
• S – Slum Expansion & Urban Vulnerability: Around 17% of India’s urban population lives in slums (Census 2011), with recent growth driven by migration and limited affordable housing.
• U – Unemployment & Informal Work: Youth unemployment stands at 10.2% (PLFS 2023–24), rising to 29% for graduates and over 80% of the workforce remains in informal jobs without social security.
• R – Regional Disparities: States like Bihar continue to show over 25% poverty, while Kerala reports zero extreme poverty, mirroring uneven development across India.
• E – Environmental & Climate Stress: About 51% of Indian children face the double burden of poverty and climate vulnerability; disasters like Cyclone Amphan displaced 2.4 million people in 2020 alone.

What Measures can be Taken to Reduce Poverty in India?

To ease the PRESSURE of persistent poverty, India needs to strengthen a PROSPER strategy that expands opportunities, strengthens safety nets, and drives inclusive, resilient growth.

• P – Strengthen Public Services: Expand access to quality health, nutrition, and education through Ayushman Bharat, and POSHAN Abhiyan, and Samagra Shiksha to build long-term human capital and resilience.
• R – Diversify Rural Livelihoods: Reduce overdependence on low-productivity agriculture by scaling PM-KUSUM, Dairy/Fisheries Missions, and MGNREGA asset creation to boost non-farm rural incomes.
• O – Opportunities for Skilling and Jobs: Address youth unemployment by upgrading Pradhan Mantri Kaushal Vikas Yojana (PMKVY), and promoting labour-intensive sectors under Make in India.
• S – Strengthen Social Safety Nets: Reinforce food security, housing, and direct support through One Nation One Ration Card, Pradhan Mantri Awas Yojana – Urban (PMAY-U) 2.0, and Direct Benefit Transfer (DBT) systems to protect vulnerable households from economic shocks.
• P – Enhance Inclusion of Women & Marginalised Groups: Deepen economic participation through DAY-NRLM SHGs,  and targeted interventions in Aspirational Districts.
• E – Build Climate-Resilient Systems: Safeguard rural livelihoods through water conservation missions, and climate-adaptive practices under Mission LiFE.
• R – Reduce Regional Disparities: Focus on lagging states and tribal areas through PM-Janman, and the Aspirational Blocks Programme to ensure balanced development.

Conclusion

India’s poverty challenge has shifted from widespread deprivation to concentrated pockets of vulnerability driven by inequality, climate stress, and regional disparities. A calibrated PROSPER strategy can help India secure inclusive and sustainable poverty reduction.

Drishti Mains Question:

Q. Poverty in India is now concentrated in tribal and lagging regions. Discuss and suggest policy measures.

Frequently Asked Questions (FAQs)

1. What does the Multidimensional Poverty Index (MPI) measure?
MPI measures deprivations in health, education, and living standards, capturing both the proportion of people who are poor and the average number of deprivations they face simultaneously.

2. What does the Gini Index measure?
It measures inequality in income or consumption distribution, 0 means perfect equality, and 100 indicates perfect inequality. India’s consumption-based Gini index fell from 28.8 (2011-12) to 25.5 (2022-23). 

3. What is “consumption-based poverty” in India?
It is poverty measured using household consumption expenditure rather than income, based on surveys such as the Household Consumption Expenditure Survey (CES) using 7-day, 30-day, and 365-day reference periods.

UPSC Civil Services Examination, Previous Year Question (PYQ)  

Prelims

Q. The Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development Initiative with UNDP support covers which of the following? (2012)

1. Deprivation of education, health, assets and services at household level  
2. Purchasing power parity at national level  
3. Extent of budget deficit and GDP growth rate at national level  

Select the correct answer using the codes given below:  

(a) 1 only  

(b) 2 and 3 only  

(c) 1 and 3 only  

(d) 1, 2 and 3  

Ans: (a) 

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Mains

Q. Poverty and malnutrition create a vicious cycle, adversely affecting human capital formation. What steps can be taken to break the cycle? (2024)