Rural poverty in India falls below 5% for first time in FY2024: SBI report

Rural poverty in India dropped below 5% for the first time in the financial year 2023-24, driven by a sharp rise in rural spending and government support initiatives, according to an analysis by SBI Research.

“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. We believe urban poverty could decline further. At an aggregate level, India’s poverty rate could now range between 4% and 4.5%, with minimal extreme poverty,” the report stated.

The study credited the decline in rural poverty to improved infrastructure, which boosted urban mobility and reduced rural-urban income disparities. Rising government transfers, particularly through Direct Benefit Transfer (DBT) schemes, also played a key role in narrowing the rural-urban consumption gap, according to the report.

The rural-urban consumption gap narrowed to 69.7% in FY24 from 71.2% a year ago and 83.9% a decade earlier, it noted.

“Around 30% of rural MPCE (monthly per-capita consumer expenditure) is explained by endogenous factors within the rural ecosystem. Such endogenous factors are mostly due to the initiatives the government has taken in terms of DBT transfers, building Rural infrastructures, augmenting farmer’s income, improving the rural livelihood significantly,” the report said.