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Informist, Friday, Jan. 3, 2025

 

NEW DELHI – Rural poverty levels fell far more sharply than urban levels last year compared with the previous 12 months based on data from the latest Household Consumption Expenditure Survey, as per an analysis by State Bank of India's economists. According to their estimates, rural poverty fell to 4.86% in 2023-24 (Aug-Jul) from 7.20% in 2022-23 (Aug-Jul), while urban poverty declined to 4.09% from 4.60%.

 

"The sharp decline in rural poverty ratio is on account of higher consumption growth in lowest 0-5?cile with significant government support and 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," Soumya Kanti Ghosh, SBI's group chief economic adviser, said in a report Friday.

 

Last week, the Indian statistics ministry released the factsheet for the 2023-24 Household Consumption Expenditure Survey, which showed that rural households' average monthly per capita consumption expenditure rose 9.2% year-on-year to INR 4,122 in 2023-24, while that of urban households was 8.3% higher at INR 6,996 without taking into account the value of items they received for free via welfare programmes. The rise in consumption expenditures was driven by the poorest households, with the bottom 5% in rural areas seeing their monthly per capita consumption expenditure surge 22.1% on year to INR 1,677 in 2023-24, while the increase for the poorest 5% of urban households was 18.7%. The top 5% of households, on the other hand, saw their monthly per capita consumption expenditure fall in 2023-24 by 3.5% in rural areas and 2.5% in urban areas.

 

Using the poverty line estimate of INR 816 for rural areas and INR 1,000 for urban area, SBI's Ghosh estimated the new inflation-adjusted poverty line as per the latest consumption survey to be INR 1,632 for rural and INR 1,944 for urban areas.

 

"Remarkably, states that were once considered laggards are showing the maximum improvement in Rural and Urban Gap," Ghosh noted, name-checking Bihar and Rajasthan as states "showing increasingly the impact of factors that are endogenous to the Rural Ecosystem". However, the economist also voiced concern at the situation in some states where the increase in average rural monthly per capita expenditure in 2023-24 over 2022-23 was the lowest for every rupee increase in the urban monthly per capita expenditure. These include states such as Maharashtra, where rural consumption rose INR 135 in 2023-24 from the previous year while urban consumption increased by INR 706, resulting in a rural-urban ratio of just 19%--the lowest among all states. Meanwhile, the ratio was highest for Karnataka (123%), with the other states, which Ghosh said saw rural consumption rising at least as much as urban, being Andhra Pradesh (114%) and Haryana (100%).  End

 

Reported by Siddharth Upasani

Edited by Namrata Rao

 

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