India’s extreme poverty declined below 5 percent in 2024 to 4.6 percent from 5.3 percent estimated by the World Bank in 2023, SBI Research said in a note on June 10.
The note comes within days of the World Bank saying that India lifted nearly 270 million out of extreme poverty between 2011-12 and 2022-23, it said.
“Recent estimates for poverty ratio for India are comparable with consumption-based estimates by SBI, making allowance for different in methods and definitions,” SBI researchers said.
The World Bank said extreme poverty in India dipped to 5.2 percent in 2022-23 from 27.1 percent nearly a decade ago. The fall came despite the World Bank raising the poverty line to $3 (around Rs 257) a day, calculated in purchasing power parity terms compared with $2.15 earlier.
If the $2 mark is considered, the poverty rate is expected to be even lower at 2.4 percent, with just 33.6 million living below the poverty line.
Rate cut
Taking note of the recent larger-than-expected repo rate cut of 50 basis point, SBI Research said jumbo cuts by the RBI have been more common since 2001. The change in stance should not be construed as end of the rate cut cycle, it added.
On June 6, the Reserve Bank of India while lowering the repo rate to 5.5 percent, the third such straight reduction, changed the stance from “accommodative” to “neutral” .
“The MPC decision to go for a relatively mammoth cut, while changing the stance to neutral, should not be confused with a pause on future rate cuts trajectory in the medium term but rather a semblance of adopting flexible maneuverability on part of a conscious regulator to diligently perform a new troika — manage the yield curve and ensure adequate liquidity in the ecosystem, while renewing the pledge to keep growth sacrosanct… mindful of inflationary concerns and checkmating any bubbles formation,” the note said.
The rate cut would also help retail and MSME loan portfolio, yielding savings of Rs 50,000-60,000, it added.
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