Rural poverty in India has sharply declined to 4.86% in the fiscal year ending March 2024, compared to 25.7% in 2011-12, according to an SBI research report. Urban poverty has also seen a significant reduction, standing at 4.09% in FY24, down from 13.7% in FY12. The report attributes these improvements to government initiatives like direct benefit transfers (DBTs), rural infrastructure development, and programs to augment farmer incomes, which have significantly enhanced rural livelihoods and reduced consumption inequality.
The SBI research highlights the transformative role of improved infrastructure in narrowing the income gap between rural and urban areas, with rural mobility seeing substantial progress. The difference in per capita consumption expenditure between rural and urban areas has decreased from 88.2% in 2009-10 to 69.7% in FY24. However, food inflation remains a concern, particularly in lower-income states, where it has a greater impact on consumption demand. These states also tend to have lower savings rates, driven by factors like outward migration.
The report notes that poverty rates may undergo minor revisions after the completion of the 2021 Census and the publication of updated population data. The newly defined poverty line for FY24 is Rs 1,632 for rural areas and Rs 1,944 for urban areas. Additionally, changes in the weights of food items in the Consumer Expenditure Survey (CES) for FY24 are expected to influence food inflation and overall consumer price inflation (CPI) dynamics.
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