How poor is ‘poor' in India?

India Today

5 hours ago

Can data really define poverty in India? The numbers certainly suggest progress. Fewer people live below the international poverty line. More people have access to food, jobs, electricity, and housing. Government dashboards show consistent improvement across key areas.But behind the graphs and charts, millions still live just one setback away from hunger. Their names may no longer show up in poverty counts, but their reality hasn't changed much. They are not poor on paper, but they aren't secure either.advertisementFor a large part of India, the line between survival and collapse is still painfully thin.MILLIONS EXIT POVERTY, YET REMAIN VULNERABLE
The World Bank's latest global poverty update, released in June 2025, confirms the headline: extreme poverty in India has dropped sharply. The share of people living on less than $3 a day, adjusted for local prices (what economists call 'purchasing power parity' or PPP), fell from 27% in 2011 to just 5.3% in 2022. If we use the older $2.15-a-day cutoff, the rate is even lower: just 2.3%.That means nearly 269 million people exited extreme poverty in just over a decade. On the surface, this sounds like a remarkable transformation. But what does it really mean to live above $3 a day in India?To understand that, we need to look at how this poverty line is calculated. The World Bank doesn't use market exchange rates, which vary with inflation and currency swings. Instead, it uses PPP rates, which try to reflect how much a dollar can buy in each country.Based on the IMF's latest figures, India's PPP exchange rate in 2025 is about Rs 20.66 for every 'international dollar.'That means $3 a day works out to around Rs 62 per person.IS RS 62 A DAY ENOUGH?But that number raises questions. Can Rs 62 a day cover rent, food, transport, medicines, and other basic needs in India?
Dr. Vidya Mahambare, Professor of Economics at Great Lakes Institute of Management and an expert in development economics, doesn't think so. 'The Rs 62-per-day threshold appears extremely inadequate when compared to current living costs,' she said. 'One way to consider a minimum threshold for basic living is to compare it with the minimum wage—the lowest legally approved earnings level.'Currently, the central government provides a non-statutory floor wage of Rs 178 per day, below which no state can set its minimum. By contrast, the World Bank's international poverty line for lower-middle-income countries—$4.20 per day—comes to roughly Rs 87 in PPP terms. 'By this measure, around 23.9% of India's population remains below the poverty line,' she noted.advertisementMahambare also stressed the need to revise India's outdated poverty line. 'The lower the threshold, the lower the poverty headcount ratio,' she said. 'But such a number is not useful for policymaking and doesn't reflect the ground-level reality of people's hardships.'On the use of international poverty lines, she said PPP-based measures are helpful for global comparisons since they account for differences in prices and are more stable than market exchange rates. But for domestic policy, she said, 'the poor in India consume a different basket of goods than the global average. A domestic cost-of-living benchmark more accurately reflects local realities and is better suited for national programs.'FROM POVERTY LINE TO DIGNITY LINEEven the Rs 87-per-day benchmark might understate the true burden. Dr. Swapnil Sahoo, Assistant Professor at Great Lakes Institute of Management, Gurgaon, believes it is time India stopped relying only on income-based definitions of poverty. 'Yes, extreme poverty is down to 5.75%. But that doesn't tell us the whole story,' he said. 'More than 83% of Indians still live on less than Rs 171 a day.'The Rs 171-a-day figure is based on the World Bank's $8.40 poverty line in purchasing power parity (PPP) terms, which is used to assess poverty in upper middle-income countries. At India's current PPP exchange rate of Rs 20.66 per international dollar, this translates to around Rs 171 per person per day.advertisementFor him, the Rs 65-a-day cutoff for poverty is setting the bar too low. 'That is not a dignified life,' he said. 'We need a dignity line, not just a poverty line.' The Rs 65 figure was recently cited by SBI Research as the poverty threshold for urban India in 2023–24.According to Sahoo, a more honest measure of poverty would start around Rs 250 to Rs 300 a day. This would reflect a life that allows for food, health care, education, some savings, and a sense of security, not just survival.
INDIA'S POVERTY PUZZLETo be fair, many government schemes have helped families escape extreme deprivation. Food subsidies, rural roads, cash transfers, and better access to electricity have improved lives in measurable ways. Incomes in agriculture and construction have also grown in some regions. But part of the reason poverty seems lower today also comes down to how it is measured.advertisementIndia's official household consumption surveys now use a method called the Modified Mixed Recall Period (MMRP). This change helps capture more spending, especially on regular items like food and fuel. As a result, people appear to be consuming more, and poverty estimates fall.That is where experts urge caution. India hasn't officially updated its poverty line since 2011-2012. Committees were set up, but their recommendations were never implemented. In the absence of a fresh national benchmark, India is now relying on global definitions.Earlier official thresholds, Rs 33 a day for urban areas and Rs 27 for rural (set by the Tendulkar Committee), are outdated and politically sensitive. As a result, they have quietly disappeared from policymaking.To fill that gap, India has turned to broader indicators like the Multidimensional Poverty Index (MPI). Developed globally and adapted by NITI Aayog, it tracks things like access to school, electricity, clean water, cooking fuel, and sanitation, offering a fuller picture of deprivation.According to the latest MPI data, India's rate of multidimensional poverty has fallen from 29% in 2013 to 11.3% in 2022. Over 200 million people have moved out of deprivation during this period.advertisementUttar Pradesh, Bihar, and Madhya Pradesh have shown the biggest improvements. Access to basic services has grown, though these same states still carry some of the highest overall poverty burdens.IndiaToday.in reached out to NITI Aayog to seek views on the implications of the MMRP methodology and the relevance of an official poverty line in the multidimensional era. A response was awaited at the time of publishing.INEQUALITY BLURS THE PICTUREEven as extreme poverty drops, inequality hasn't gone away. The Gini index, a number between 0 and 100 that measures income inequality, has improved slightly, from 28.8% in 2011 to 25.5% in 2022. A score of 0 means perfect equality and 100 means one person has everything.Still, wealth continues to be concentrated at the top. In rural areas, poverty is shaped by shrinking land, low farm incomes, and seasonal migration. In cities, it is about unstable jobs, high rents, and crushing costs that can push families back into debt at any moment.Financial analyst Hardik Joshi argues that India does not have a poverty problem, it has a distribution problem. Citing findings from the World Inequality Database, he points out that the top 1% of Indians now control 40.1% of the country's wealth, while the bottom 50% own just 6.4%.
The top 10% take home more than 57.7% of the national income.In his words, this means half the country is fighting for crumbs while a tiny fraction lives in unimaginable luxury. According to Joshi, tax policies, corporate consolidation, and weak labour laws all contribute to protecting wealth at the top and deepening the divide.'We produce enough wealth. We just don't share it fairly,' Joshi writes. 'Until there is real political will to tax wealth, invest in education and healthcare, and support labour protections, inequality will only worsen.'POVERTY ABOVE THE LINEOpposition leaders have criticised the government for celebrating statistical success while ignoring ground realities. In 2024, many pointed out that lakhs of families still rely on subsidised rations. Falling below the poverty line isn't the only form of suffering; many are stuck just above it, constantly on edge.As the country sets its sights on becoming a Viksit Bharat (a developed nation) by 2047, should the definition of poverty not evolve too?The methodology used today suggests progress and tells us who is no longer counted as poor, yet says little about those who still live one setback away from crisis—unable to absorb a hospital bill, a missed wage, or a child's school expenses.- EndsMust Watch