A research report from the Economic Department of State Bank of India titled – Consumption Expenditure Survey has showed a remarkable decline in Rural Poverty estimated at 4.86% in FY24.
This is compared with 7.2% in FY23 and 25.7% in FY12.
During the period, the urban poverty is estimated at 4.09% compared with 4.6% in FY23 and 13.7% in 2011-12, the bank said in its report.
Overall, poverty levels now stand in the range of 4-4.5%. The sharp decline in rural poverty ratio is on account of higher consumption growth in lowest 0-5% decile with significant Government support, the survey said.
“Such support is important as we also find that change in food prices has significant impact on not just food expenditures, but overall expenditure in general….the new weights drives down headline inflation by as much as 50 basis points in Nov’2024,” the report said.
Following are the highlights of the survey:
Based on 2023-24 fractile distribution, the sample proportion for poverty in rural areas is 4.86% and 4.09% in urban areas in
FY24…This is significantly lower than FY23 estimates of rural poverty at 7.2% and urban poverty at 4.6%…
❑ It is possible that these numbers could undergo minor revisions once the 2021 census is completed and new Rural Urban
population share is published. 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
❑ Enhanced physical infrastructure is scripting a new story in Rural Mobility…one of the reasons for the increasingly shrinking
horizontal income gap between Rural and Urban and the vertical income gap within Rural Income classes
❑ The difference between rural and urban 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, improving the rural livelihood significantly
❑ We estimate 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
❑ We estimate that Nov’24 inflation because of the new weights would be 5.0% against 5.5%…
❑ Most of the high-income states delineate a savings rate greater than National Average (31%). Uttar Pradesh and Bihar show
low savings rate possibly due to higher outward migration