Rural poverty declines steeply in FY24 at 4.86%: SBI research

Rural poverty has declined significantly to 4.86% in the fiscal ending March 2024 from 25.7% in 2011-12 mainly driven by government support programmes, said a SBI research released on Friday.

Urban poverty too is estimated at 4.09%, down from 13.7% in 2011-12.

"The sharp decline in rural poverty ratio is on account of higher consumption growth in lowest 0-5% decile with significant government support and such support is important as we also find that change in food prices has a significant impact on not just food expenditures, but overall expenditure in general," said the SBI research on consumption expenditure survey.

The latest Household Consumption Expenditure Survey, released by the Ministry of Statistics & Programme Implementation, showed that consumption inequality in rural as well as urban areas declined during the August 2023-July 2024 period as compared to a year ago.

The SBI research said that the Consumption Expenditure Survey reveals a remarkable decline in rural poverty estimated at 4.86 per cent in 2023-24 (7.2% in FY23 and 25.7% in FY12) and urban poverty estimated at 4.09% (4.6% in FY23 and 13.7% in 2011-12).

It is possible that these numbers could undergo minor revisions once the 2021 census is completed and the new rural-urban population share is published, the research report said.

"We believe urban poverty could decline even further. At an aggregate level, we believe poverty rates in India could now be in the range of 4-4.5% with almost minimal existence of extreme poverty," it said.

Enhanced physical infrastructure is scripting a new story in rural mobility, it said and added that one of the reasons for the increasingly shrinking horizontal income gap between rural and urban and the vertical income gap within rural income classes," SBI said.

"The difference between rural and urban monthly per capita consumption expenditure/ Monthly Per Capita Consumption Expenditure (MPCE) to rural MPCE is now at 69.7%, a rapid decline from 88.2% in 2009-10...mostly due to the initiatives the government has taken in terms of DBT transfers, building rural infrastructures, augmenting farmer’s income, (and) improving the rural livelihood significantly," it said.

The research estimates that food inflation dampens consumption demand more in lower-income states as compared to higher-income states, reflecting that rural people are comparatively more risk-averse in low-income states than in high-income states.

Most of the high-income states delineate a savings rate greater than the national average (31%).

Uttar Pradesh and Bihar show low savings rates possibly due to higher outward migration, the SBI report said.

The new estimated poverty line is ₹1,632 in rural areas and ₹1,944 in urban areas in 2023-24.