Poverty in India remains a major challenge despite overall reductions in the last several decades as its economy grows. According to an International Monetary Fund paper, extreme poverty, defined by the World Bank as living on US$1.9 or less in purchasing power parity (PPP) terms, in India was as low as 0.8% in 2019, and the country managed to keep it at that level in 2020 despite the unprecedented COVID-19 outbreak.^[1][2] According to the World Bank, India experienced a significant decline in the prevalence of extreme poverty from 22.5% in 2011 to 10.2% in 2019. A working paper of the bank said rural poverty declined from 26.3% in 2011 to 11.6% in 2019. The decline in urban areas was from 14.2% to 6.3% in the same period. The poverty level in rural and urban areas went down by 14.7 and 7.9 percentage points, respectively.^[3] According to United Nations Development Programme administrator Achim Steiner, India lifted 271 million people out of extreme poverty in a 10-year time period from 2005–2006 to 2015–2016. A 2020 study from the World Economic Forum found "Some 220 million Indians sustained on an expenditure level of less than Rs 32 / day—the poverty line for rural India—by the last headcount of the poor in India in 2013."^[4]

The World Bank has been revising its definition and benchmarks to measure poverty since 1990–1991, with a $0.2 per day income on purchasing power parity basis as the definition in use from 2005 to 2013.^[5] Some semi-economic and non-economic indices have also been proposed to measure poverty in India. For example, in order to determine whether a person is poor, the Multi-dimensional Poverty Index places a 33% weight on the number of years that person spent in school or engaged in education and a 6.25% weight on the financial condition of that person.^[6]

The different definitions and underlying small sample surveys used to determine poverty in India have resulted in widely varying estimates of poverty from the 1950s to 2010s. In 2019, the Indian government stated that 6.7% of its population is below its official poverty limit.^[7] Based on 2019's PPPs International Comparison Program,^[8][9][10] According to the United Nations Millennium Development Goals (MDG) programme, 80 million people out of 1.2 billion Indians, roughly equal to 6.7% of India's population, lived below the poverty line of $1.25 ^[11] and 84% of Indians lived on less than $6.85 per day in 2019.^[12] According to the second edition of the Multidimensional Poverty Index (MPI) released by Niti Aayog, approximately 14.96% of India's population is considered to be in a state of multidimensional poverty.^[13] The National Multidimensional Poverty Index (MPI) assesses simultaneous deprivations in health, education, and standard of living, with each dimension carrying equal weight. These deprivations are measured using 12 indicators aligned with the Sustainable Development Goals (SDGs).^[14] On July 17, 2023, Niti Aayog reported a significant reduction in the proportion of poor people in the country, declining from 24.8% to 14.9% during the period from 2015–16 to 2019–21. This improvement was attributed to advancements in nutrition, years of schooling, sanitation, and the availability of subsidized cooking fuel.^[15] As per the report, approximately 135 million people in India were lifted out of multidimensional poverty between 2015–16 and 2019–21.^[16]

From the late 19th century through the early 20th century, under the British Raj, poverty in India intensified, peaking in the 1920s.^[17][18] Famines and diseases killed millions in multiple vicious cycles throughout the 19th and early 20th centuries.^[19][20] After India gained its independence in 1947, mass deaths from famines were prevented.^[21] Since 1991, rapid economic growth has led to a sharp reduction in extreme poverty in India.^[22][23] However, those above the poverty line live a fragile economic life.^[24] As per the methodology of the Suresh Tendulkar Committee report, the population below the poverty line in India was 354 million (29.6% of the population) in 2009–2010 and was 269 million (21.9% of the population) in 2011–2012.^[25] In 2014, the Rangarajan Committee said that the population below the poverty line was 454 million (38.2% of the population) in 2009–2010 and was 363 million (29.5% of the population) in 2011–2012.^[26] Deutsche Bank Research estimated that there are nearly 300 million people who are in the middle class.^[27] If these previous trends continue, India's share of world GDP will significantly increase from 7.3% in 2016 to 8.5% by 2020.^[28] In 2012, around 170 million people, or 12.4% of India's population, lived in poverty (defined as $1.90 (Rs 123.5)), an improvement from 29.8% of India's population in 2009.^[29][30] In their paper, economists Sandhya Krishnan and Neeraj Hatekar conclude that 600 million people, or more than half of India's population, belong to the middle class.^[31]

The Asian Development Bank estimates India's population to be at 1.28 billion with an average growth rate of 1.3% from 2010 to 2015. In 2014, 9.9% of the population aged 15 years and above were employed. 6.9% of the population still lives below the national poverty line and 63% in extreme poverty (December 2018)^[32] The World Poverty Clock shows real-time poverty trends in India, which are based on the latest data, of the World Bank, among others. As per recent estimates, the country is well on its way of ending extreme poverty by meeting its sustainable development goals by 2030.^[33] According to Oxfam, India's top 1% of the population now holds 73% of the wealth, while 670 million citizens, comprising the country's poorest half, saw their wealth rise by just 1%.^[34]

Definition of poverty

Poverty is the state of not having enough material possessions or income for a person basic need. Poverty may include social, economic, and political elements. Absolute poverty is the complete lack of the means necessary to meet basic personal needs, such as food, clothing, and shelter.

Economic measures

There are several definitions of poverty, and scholars disagree as to which definition is appropriate for India.^[35][36] Inside India, both income-based poverty definition and consumption-based poverty statistics are in use.^[37] Outside India, the World Bank and institutions of the United Nations use a broader definition to compare poverty among nations, including India, based on purchasing power parity (PPP), as well as nominal relative basis.^[38][39] Each state in India has its own poverty threshold to determine how many people are below its poverty line and to reflect regional economic conditions. These differences in definitions yield a complex and conflicting picture about poverty in India, both internally and when compared to other developing countries of the world.^[40]

According to the World Bank, India accounted for the world's largest number of poor people in 2012 using revised methodology to measure poverty, reflecting its massive population. However, in terms of percentage, it scored somewhat lower than other countries holding large poor populations.^[41] In July 2018, World Poverty Clock, a Vienna-based think tank, reported that a minimal 5.3% or 70.6 million Indians lived in extreme poverty compared to 44% or 87 million Nigerians. In 2019, Nigeria and Congo surpassed India in terms of total population earning below $1.9 a day.^[42][43] Although India is expected to meet the United Nations' Sustainable Development Goals on extreme poverty in due time, a very large share of its population lives on less than $3.2 a day, putting India's economy safely into the category of lower middle income economies.

As with many countries,^[44] poverty was historically defined and estimated in India using a sustenance food standard. This methodology has been revised. India's current official poverty rates are based on its Planning Commission's data derived from so-called Tendulkar methodology.^[45] It defines poverty not in terms of annual income, but in terms of consumption or spending per individual over a certain period for a basket of essential goods. Furthermore, this methodology sets different poverty lines for rural and urban areas. Since 2007, India has set its official threshold at ₹ 26 a day ($0.43) in rural areas and about ₹ 32 per day ($0.53) in urban areas.^[46] While these numbers are lower than the World Bank's $1.25 per day income-based definition, the definition is similar to China's US$0.65 per day official poverty line in 2008.^[47]

The World Bank's international poverty line definition is based on purchasing power parity basis, at $1.25 per day.^[48][49] This definition is motivated by the fact that the price of the same goods and services can differ significantly when converted into local currencies around the world. A realistic definition and comparison of poverty must consider these differences in costs of living, or must be on purchasing power parity (PPP) basis. On this basis, currency fluctuations and nominal numbers become less important, the definition is based on the local costs of a basket of essential goods and services that people can purchase. By World Bank's 2014 PPP definition, India's poverty rate is significantly lower than previously believed.^[40]

Mixed, semi-economic and non-economic measures

As with economic measures, there are many mixed or non-economic measures of poverty and experts contest which one is most appropriate for India. For example, Dandekar and Rath in 1971 suggested a measure of poverty rate that was based on number of calories consumed.^[50] In 2011, Alkire et al. suggested a poverty rate measure so-called Multi-dimensional Poverty Index (MPI), which only puts a 6.25% weight to assets owned by a person and places 33% weight on education and number of years spent in school.^[6] These non-economic measures remain controversial and contested as a measure of poverty rate of any nation, including India.^[51][52]

In 2023, the NITI Aayog published the National Multidimensional Poverty Index: A Progress Review 2023.^[53] The percentage of the total population who are multidimensionally poor in each State and Union Territory and the percentage point change in the headcount ratio between 2015-16 and 2019-21 are given below:^[54]

National poverty lines comparison
(Note: this is historical data, not current)

Country	Poverty line (per day)	Year	Reference
India	32 rupees ($0.5)	2017	[46]
Argentina	481 pesos ($11.81)	2017	[55]
China	6.3 yuan ($1)	2011	[56]
Nigeria	65 naira ($0.4)	2011	[57]
United States	$14[58]	2005	[59][60]

Comparison with alternate international definitions

India determines its household poverty line by summing up the individual per capita poverty lines of the household members. This practice is similar to many developing countries, but different from developed countries such as the United States who adjusts their poverty line on an incremental basis per additional household member. For example, in the United States, the poverty line for a household with just one member was set at $11,670 per year for 2014, while it was set at $23,850 per year for a 4-member household (or $5963 per person for the larger household).^[60] The rationale for the differences arise from the economic realities of each country. In India, households may include surviving grandparents, parents, and children. They typically do not incur any or significant rent expenses every month particularly in rural India, unlike housing in mostly urban developed economies. The cost of food and other essentials are shared within the household by its members in both cases. However, a larger portion of a monthly expenditure goes to food in poor households in developing countries,^[61] while housing, conveyance, and other essentials cost significantly more in developed economies.

For its current poverty rate measurements, India calculates two benchmarks. The first includes a basket of goods, including food items but excluding the implied value of home, value of any means of conveyance or the economic value of other essentials created, grown or used without a financial transaction, by the members of a household. The second poverty line benchmark adds rent value of residence as well as the cost of conveyance, but nothing else, to the first benchmark.^[62] This practice is similar to those used in developed countries for non-cash income equivalents and a poverty line basis.^[63][64]

India's proposed but not yet adopted official poverty line, in 2014, was ₹972 (US$12) a month in rural areas or ₹1,407 (US$17) a month in cities. The current poverty line is 1,059.42 Indian Rupees (62 PPP USD) per month in rural areas and 1,286 Indian rupees (75 PPP USD) per month in urban areas.^[65] India's nationwide average poverty line differs from each state's poverty line. For example, in 2011–2012, Puducherry had its highest poverty line of ₹1,301 (US$16) a month in rural and ₹1,309 (US$16) a month in urban areas, while Odisha had the lowest poverty thresholds of ₹695 (US$8.30) a month for rural and ₹861 (US$10) a month for its urban areas.^[66]

Poverty prevalence and estimates

The 19th century and early 20th century saw increasing poverty in India during the colonial era.^[17][67] Over this period, the colonial government de-industrialized India by reducing garments and other finished products manufactured by artisans in India. Instead, they imported these products from Britain's expanding industry due to the many industrial innovations of the 19th century. Additionally, the government simultaneously encouraged the conversion of more land into farms and more agricultural exports from India.^[68][69] Eastern regions of India along the Ganges river plains, such as those now known as eastern Uttar Pradesh, Bihar, Jharkhand and West Bengal,^[70] were dedicated to producing poppy and opium. These items were then exported to southeast and east Asia, particularly China. The East India Company initially held an exclusive monopoly over these exports, and the colonial British institutions later did so as well.^[71] The economic importance of this shift from industry to agriculture in India was large;^[72] by 1850, it created nearly 1,000 square kilometres of poppy farms India's fertile Ganges plains. This consequently led to two opium wars in Asia, with the second opium war fought between 1856 and 1860. After China agreed to be a part of the opium trade, the colonial government dedicated more land exclusively to poppy.^[69] The opium agriculture in India rose from 1850 through 1900, when over 500,000 acres of the most fertile Ganges basin farms were devoted to poppy cultivation.^[73] Additionally, opium processing factories owned by colonial officials were expanded in Benares and Patna, and shipping expanded from Bengal to the ports of East Asia such as Hong Kong, all under exclusive monopoly of the British. By the early 20th century, 3 out of 4 Indians were employed in agriculture, famines were common, and food consumption per capita declined in every decade.^[18] In London, the late 19th century British parliament debated the repeated incidence of famines in India, and the impoverishment of Indians due to this diversion of agriculture land from growing food staples to growing poppy for opium export under orders of the colonial British empire.^[69][73]

Poverty was intense during colonial era India. Numerous famines and epidemics killed millions of people each.^[19][74] Upper image is from 1876 to 1879 famine in South of British India that starved and killed over 6 million people, while lower image is of child who starved to death during the Bengal famine of 1943.

These colonial policies moved unemployed artisans into farming, and transformed India into a region increasingly abundant in land, unskilled labour, and low productivity. This consequently made India scarce in skilled labour, capital and knowledge.^[17][18] On an inflation adjusted 1973 rupee basis, the average income of an Indian agrarian labourer was Rs. 7.20 per year in 1885, against an inflation adjusted poverty line of Rs. 23.90 per year. Thus, not only was the average income below the poverty line, but the intensity of poverty was also severe. The intensity of poverty increased from 1885 to 1921, before being reversed. However, the absolute poverty rates continued to be very high through the 1930s.^[17][75] The colonial policies on taxation and its recognition of land ownership claims of zamindars and mansabdars, or Mughal era nobility, made a minority of families wealthy. Additionally, these policies weakened the ability of poorer peasants to command land and credit. The resulting rising landlessness and stagnant real wages intensified poverty.^[17][76]

The National Planning Committee of 1936 noted the appalling poverty of undivided India.^[77]

(...) there was lack of food, of clothing, of housing and of every other essential requirement of human existence... the development policy objective should be to get rid of the appalling poverty of the people.

— Nehru, The Discovery of India, (1946)

The National Planning Committee, notes Suryanarayana, then defined goals in 1936 to alleviate poverty by setting targets in terms of nutrition (2400 to 2800 calories per adult worker), clothing (30 yards per capita per annum) and housing (100 sq. ft per capita).^[77] This method of linking poverty as a function of nutrition, clothing and housing continued in India after it became independent from British colonial empire.

These poverty alleviation goals were theoretical, with administrative powers resident in the British Empire. Poverty ravaged India. In 1943, for example, despite rising agricultural output in undivided South Asia, the Bengal famine killed millions of Indians from starvation, disease and destitution. Destitution was so intense in Bengal, Bihar, eastern Uttar Pradesh, Jharkhand and Orissa, that entire families and villages were "wiped out" of existence. Village artisans, along with sustenance farming families, died from lack of food, malnutrition and a wave of diseases.^[20] The 1943 famine was not an isolated tragedy. Devastating famines impoverished India every 5 to 8 years in the late 19th century and the first half of the 20th century. Between 6.1 and 10.3 million people starved to death in British India during the 1876–1879 famine, while another 6.1 to 8.4 million people died during the 1896–1898 famine.^[78] The Lancet reported that 19 million people died from starvation and the consequences of extreme poverty in British India between 1896 and 1900.^[79] Sir MacDonnell observed the suffering and poverty in 1900, and noted, "people died like flies" in Bombay.^[80]

After Independence

1950s

Minhas published his estimates of poverty rates in 1950s India as cyclical and a strong function of each year's harvest. Minhas disagreed with the practice of using calories as the basis for poverty estimation and proposed a poverty line based on real expenditure per year (Rs 240 per annum). In 1956–57, a good harvest year, he computed India's poverty rate to be 65% (215 million people).^[81][82] For 1960, Minhas estimated the poverty to be 59%.^[83]

1960s

A Working Group was formed in 1962 to attempt to set a poverty line for India.^[84][85] This Working Group used calories required for survival, and income needed to buy those calories in different parts of rural India, to derive an average poverty line of Rs. 20 per month at 1960–61 prices.^[86]

Estimates of poverty in India during the 1960s varied widely. Dandekar and Rath, on the behalf of then Indian government, estimated that the poverty rate in 1960s remained generally constant at 41%. Ojha, in contrast, estimated that there were 190 million people (44%) in India below official poverty limit in 1961, and that this below-poverty line number increased to 289 million people (70%) in 1967. Bardhan also concluded that Indian poverty rates increased through the 1960s, reaching a high of 54%.^[83][87] Those above the 1960s poverty level of Rs 240 per year, were in fragile economic groups as well and not doing well either. Minhas estimated that 95% of India's people lived on Rs 458 per year in 1963–64, while the richest 5% lived on an average of Rs 645 per year (all numbers inflation adjusted to 1960–61 Rupee).^[81]

1970s – 1980s

Dandekar and Rath^[88] in 1971 used a daily intake of 2,250 calories per person to define the poverty line for India. Using NSSO data regarding household expenditures for 1960–61, they determined that in order to achieve this food intake and other daily necessities, a rural dweller required an annual income of ₹ 170.80 per year (₹ 14.20 per month, adjusted to 1971 Rupee). An urban dweller required ₹ 271.70 per year (₹ 22.60 per month). They concluded from this study that 40 percent of rural residents and 50 percent of urban residents were below the poverty line in 1960–61.^[89]

Poverty alleviation has been a driver for India's Planning Commission's Task Force on Projections of Minimum Needs and Effective Consumption Demand of the Perspective Planning Division. This division, in 1979, took into account differences in calorie requirements for different age groups, activity levels, and sex. They determined that the average rural dweller needed around 2400 calories, and those in urban areas required about 2100 calories per person per day. To satisfy the food requirement, the Task Force estimated that a consumer spending in 1973–74 of Rs.49.09 per person per month in rural areas and Rs.56.64 in urban areas was appropriate measure to estimate its poverty line.^[90]

Poverty remained stubbornly high in India through the 1970s and 1980s. It created slogans such as Garibi Hatao (meaning eliminate poverty) for political campaigns, during elections in early 1970s through the 1980s.^[91] Rural poverty rate exceeded 50%, using India's official poverty line for 1970s.^[92][93]

Additionally, in 1976, the Indian government passed the Bonded Labor System Act in an effort to end debt bondage in India, a practice which contributes to generational poverty.^[94] Nevertheless, this system is still in place today due to weak enforcement of this law.^[94]

1990s

Another Expert Group was instituted in 1993, chaired by Lakdawala, to examine poverty line for India. It recommended that regional economic differences are large enough that poverty lines should be calculated for each state. From then on, a standard list of commodities were drawn up and priced in each state of the nation, using 1973–74 as a base year. This basket of goods could then be re-priced each year and comparisons made between regions. The Government of India began using a modified version of this method of calculating the poverty line in India.^[95]

There are wide variations in India's poverty estimates for 1990s, in part from differences in the methodology and in the small sample surveys they poll for the underlying data. A 2007 report for example, using data for late 1990s, stated that 77% of Indians lived on less than ₹ 20 a day (about US$0.50 per day).^[96] In contrast, S.G.Datt estimated India's national poverty rate to be 35% in 1994, at India's then official poverty line of Rs 49 per capita, with consumer price index adjusted to June 1974 rural prices.^[93]

2000s

The Saxena Committee report, using data from 1972 to 2000, separated calorific intake apart from nominal income in its economic analysis of poverty in India, and then stated that 50% of Indians lived below the poverty line.^[97] The Planning Commission of India, in contrast, determined that the poverty rate was 39%.

The National Council of Applied Economic Research estimated that 48% of the Indian households earn more than ₹90,000 (US$1,078.40) annually (or more than US$ 3 PPP per person). According to NCAER, in 2009, of the 222 million households in India, the absolutely poor households (annual incomes below ₹45,000 (US$540)) accounted for only 15.6% of them or about 35 million (about 200 million Indians). Another 80 million households are in the income levels of ₹45,000 (US$540) to ₹90,000 (US$1,100) per year. These numbers are similar to World Bank estimates of the "below-the-poverty-line" households that may total about 100 million (or about 456 million individuals).^[98]

The Suresh Tendulkar Committee set up to look into the people living under the poverty line in India submitted its report in November 2009.^[99] It provided a new method of calculating the poverty line based on per capita consumption expenditure per month or day. For rural areas, it was Rs 816 per month or Rs 27 per day. For urban areas, it was Rs 1000 per month or Rs 33 per day. Using this methodology, the population below the poverty line in 2009–2010 was 354 million (29.6% of the population) and that in 2011–2012 was 269 million (21.9% of the population).^[100]

Reserve Bank of India (2012)

In its annual report of 2012, the Reserve Bank of India named the state of Goa as having the least poverty of 5.09% while the national average stood at 21.92%^[7] The table below presents the poverty statistics for rural, urban and combined percentage below poverty line (BPL) for each State or Union Territory.^[7] The highest poverty statistics for each category column is coloured light red and the lowest poverty statistics for each category column is coloured light Blue in the table below.

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