Consumer Expenditure Survey shows poverty at a decade low of 4.5-5%, says SBI

The survey data also shows that consumption inequality had fallen in both rural and urban areas, with rural consumption fast catching up with urban consumption.

The latest Consumer Expenditure Survey suggests that India's poverty levels dropped sharply in 2022-23, with urban poverty at 4.6 percent and rural at 7.2 percent, State Bank of India's group chief economic advisor Soumya Kanti Ghosh has pointed out.

These levels are significantly lower than 13.7 percent for cities and 25.7 percent for villages estimated in 2011-12.

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"It is possible that these numbers could undergo minor revisions once the 2021 population (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 4.5-5 percent," Ghosh said in a report on February 27.

"Remarkably, states that were once considered laggards are showing the maximum improvement in rural and urban gap. States like Bihar, Uttar Pradesh and Madhya Pradesh are showing increasingly the impact of factors that are endogenous to the rural ecosystem," he said.

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As per the details of the Consumer Expenditure Survey for 2022-23 (August-July), released by the statistics ministry on February 24, the monthly per-capita consumption expenditure had risen by 40 percent from 2011-12 (July-June) to Rs 2,008, while it was up 33 percent in urban areas at Rs 3,510 after adjusting for inflation.

According to Ghosh, the faster fall in rural poverty "indicates that many government programmes currently for those at the bottom of the pyramid are having a significant salutary impact on rural livelihood".

Using the survey data, Ghosh estimated a new poverty line of Rs 1,622 for rural India and Rs 1,929 for urban areas in 2022-23, up from Rs 816 and Rs 1,000 for 2011-12.

Ghosh also found that consumption inequality had fallen in both rural and urban areas. However, the consumption inequality between rural and urban has also declined, with rural consumption catching up fast with urban consumption.

The latest survey data also reflected a reduction in spending on food items as a percentage of total monthly per capita consumption expenditure in both rural and urban areas.

"India is becoming more aspirational as indicated by the increasing share of discretionary consumption (like spending on beverages, intoxicants, entertainment and durable goods) in rural and urban areas. The speed of aspiration is swifter in rural areas as compared to urban areas," Ghosh said.