India is experiencing an unseen economic revolution, one not always reported by stock markets or quarterly GDP figures, but by a more fundamental measure of the living standards of its citizens. The recently released Household Consumption Expenditure Surveys (HCES) for 2022–23 released by the Ministry of Statistics and Programme Implementation (MoSPI) on January 30, and 2023–24 by the National Statistical Office (NSO) offer a comprehensive picture of how poverty and inequality have evolved in the country over the past decade. For the first time, poverty rates in India have fallen to single digits, a feat that speaks volumes about the country’s developmental trajectory.
The statistics not only demonstrate poverty reduction but also indicate a favourable change in rural consumption patterns, a shrinking of the rural-urban consumption gap, and a decline in income inequality. The indicators combined point to a more inclusive growth narrative, one where the dividend of economic growth is being shared more equally.
The poverty estimates in the recent survey follow the Rangarajan Committee’s approach of using per capita monthly consumption expenditure as the benchmark. The rural poverty line (PL) was Rs.979 in 2011–12 and similarly revised to Rs.1,837 in 2022–23 and Rs.1,940 in 2023–24. For urban areas, the PL was Rs.1,407 in 2011–12 and revised to Rs.2,603 in 2022–23 and Rs.2,736 in 2023–24.
By using these revised cutoffs, India’s all-India poverty ratio fell from 29.5 per cent in 2011-12 to 4.9 per cent in 2023-24, an unprecedented 24.6 percentage point reduction over 12 years. That works out to a yearly reduction of 2.05 percentage points, which is marginally less than the 2.2-point yearly decline between 2004-05 and 2011-12. But in absolute terms, it means millions of families have exited poverty in a little over a decade.
The Sharp Decline in Poverty
The 2023–24 survey estimates poverty at:
• Rural India – 10.4 per cent
• Urban India – 6.5 per cent
• All India – 9.4 per cent
This is a sharp decline from the 2011–12 levels, which had rural poverty at 33.9 per cent, urban poverty at 20.9 per cent, and all-India poverty at 29.5 per cent. The steady decline in both rural and urban areas reflects a wider systemic shift rather than sporadic occurrences.
This is even more remarkable in an international perspective. Following the World Bank’s Poverty & Equity Brief (2024), India has seen a notably diminished level of poverty in both extreme poverty (below $2.15/day) and lower-middle-income levels ($3.65/day). Severe poverty in India reduced from 16.2 per cent in 2011 to just 2.3 per cent in 2022. The proportion of Indians living below the $3.65/day threshold declined from 61.8 per cent in 2011 to just 28.1 per cent in 2022, a whopping 33.7 percentage point decline.
What Accounts for the Decline?
A combination of factors has led to this historic decrease:
1. GDP Growth: Strong GDP growth path over the last decade has raised incomes, particularly in the rural sector, as agricultural output, MNREGA, and central transfers have enhanced purchasing power.
2. Social Welfare Schemes: Social welfare schemes such as Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), PM Awas Yojana, Swachh Bharat Abhiyan, and Jan Dhan Yojana have provided a safety net to the poor and helped to raise their standard of living.
3. Digital and Financial Inclusion: Growth in digital infrastructure and financial inclusion has enhanced the delivery of services and reduced leakages in welfare schemes. This has counted for real gains for poor households.
4. Improved Targeting and Direct Benefit Transfers (DBTs) : Aadhaar and JAM trinity (Jan Dhan, Aadhaar, Mobile) have assisted the government to target the subsidies more effectively as well as in making sure that benefits are delivered to the targeted beneficiaries.
“Rural India” The Surprise Growth Engine
One of the most encouraging parts of the data is the resilient pick-up in rural consumption. The 2022–23 HCES said that rural MPCE increased to Rs 3,773, up 164 per cent from 2011–12. By contrast, urban MPCE increased by 146 per cent to Rs 6,459.
The trend continued in 2023–24 with rural MPCE rising again to Rs. 4,122 and urban MPCE to Rs. 6,996. Perhaps more importantly, the difference between urban and rural consumption declined dramatically. In 2011–12, urban MPCE was 84 per cent greater than rural MPCE. In 2023–24, this difference contracted to only 70 per cent.
This convergence implies that rural India’s growth in income and consumption is converging towards the national averages, reflecting a more inclusive economic push. Such attempts by the government to improve rural employment opportunities, infrastructure, and rural connectivity are appearing to be paying off.
Altered Household Spending Patterns
Another surprising revelation of the survey is the change in intra-household consumption priorities. Non-food purchases now represent over half of rural spending for the first time, 53 per cent in rural (from 47 per cent in 2011-12) and 60 per cent in urban (from 57 per cent).
Food items, though still considerable, are becoming relatively less important. Processed foods, drinks, and refreshments now make up:
• 9.84 per cent of food expenditure in rural households
• 11.09 per cent in urban homes
Conversely, the proportion of cereals in food spending has reduced, reflecting diversifying dietary habits. This indicates rising incomes and lifestyles and even in rural regions.
Inequality declined
If anything, the most comforting statistic is the decline in inequality. The Gini coefficient is a widely used indicator of economic inequality. It measures the extent to which the distribution of income or wealth within a country differs from a perfectly equal distribution.
The Gini coefficient has dropped:
Rural – From 0.310 in 2011–12 to 0.282 in 2022–23 to 0.273 in 2023–24
Urban – From 0.364 in 2011–12 to 0.324 in 2022–23 to 0.317 in 2023–24
All India – From 0.339 in 2011–12 to 0.297 in 2022–23 to 0.283 in 2023–24
This implies that not only has poverty reduced, but consumption distribution has become more equal. Furthermore, the reduction in inequality has been steeper in rural India than in cities, highlighting a convergence of prosperity.
Uneven but Encouraging Insights of States
Although there is a positive national trend, state-level figures depict inconsistency. Kerala, Punjab, Haryana, and Tamil Nadu maintain their performance levels higher than the national average at both rural and urban MPCE.
Odisha achieved the highest rural MPCE growth in 2023–24 at 14 per cent, followed by Punjab with the highest urban MPCE growth at 13 per cent. Backward states such as Bihar and Uttar Pradesh have also shown some improvement, but gap with national averages continues to persist, which justifies policy attention to continue.
Policy Implications and the Way Forward
The trends have significant policy implications. Some of the lessons are:
1. Redoing CPI Weightage: As relative spending on food is reducing, calls are being made to redo the Consumer Price Index (CPI) basket. The present CPI assigns excessive weight to foods, which might not be in sync with contemporary consumption patterns.
2. Education and Health Take Center Stage: As individuals scale the rung of the consumption ladder, they will be seeking higher-quality education, healthcare, and dwellings. Policy needs to be ahead of these changing aspirations.
3. Rural Diversification Support: With rural consumption widening and non-food expenditure growing, rural manufacturing, services, and value chains need to be supported so that this trend is maintained.
The India Growth Story Gets Inclusive
The recent NSO numbers offer a promising vision of a more egalitarian and prosperous India. For four decades, the Indian growth narrative was condemned as jobless or unequal. But the results of the 2022–24 HCES depict a change, both in statistics and in realities.
The poor are not merely living; they are starting to flourish. The rural economy is no longer a laggard; it is turning into a growth driver. Consumption patterns are becoming diversified, aspirations are increasing, and inequality is declining. India’s backwaters must be recognised and encouraged for this quiet revolution.
In fact, as India shoots for a $5 trillion economy, it is imperative that this growth is inclusive. The results of these surveys act as a timely reminder that growth with equity is not just possible, but is already in progress.
