India has “virtually eliminated” extreme poverty between 2011-12 and 2023-24, with the poverty rate among Muslims slightly lower (1.5% of their population) than among Hindus (2.3%).
This is what a new paper authored by Columbia University professor and Sixteenth Finance Commission Chairman Arvind Panagariya and Vishal More, founder of the New Delhi-based research and consulting firm Intelink Advisors, published in the Economic & Political Weekly, says.
As per the paper, in 2022-23 too, the gap between the two communities was the same, with the poverty rate among Muslims (4% of the population) 0.8 percentage point behind Hindus (4.8%).
Noting that “the country has virtually eliminated extreme poverty”, the paper adds: “The common perception that Muslims experience a higher incidence of poverty than Hindus… requires correction, at least with respect to extreme poverty.”
The World Bank defines extreme poverty as living on less than $3 per person per day in purchasing power parity (PPP) terms. As per the authors, it is close to the Tendulkar poverty line, the last officially adopted poverty line.
The paper estimates poverty levels across social, religious, and economic groups, and rural and urban areas, at the state and Union Territory as well as national levels. “The estimates indicate that the decline in poverty over the 12 years from 2011-12 to 2023-24 has been substantial and broad-based, to the point that the country has virtually eliminated extreme poverty,” write the authors.
Apart from the Tendulkar poverty line, the paper uses unit-level data from a modified mixed reference period gathered by the Ministry of Statistics and Programme Implementation’s Household Consumption Expenditure Survey for 2011-12, 2022-23 and 2023-24.
As per the authors the national (rural+urban) poverty line based on the Tendulkar method was set at Rs 932 per person per month in 2011-12, Rs 1,714 in 2022-23 and Rs 1,804 in 2023-24. In the paper, each household is counted as poor or non-poor based on the poverty line for the state and area (rural or urban). Those classified as poor are then added up according to the group.
The unit-level data collects information regarding expenditure on infrequently purchased items using a 365-day reference period, on moderately frequent purchases using a 30-day reference period, and on frequently purchased items – such as food, edible oils, and vegetables – using a seven-day reference period.
According to the paper, overall poverty has witnessed a “sharp and sustained” decline in the 2011-2024 period. “The national poverty rate fell from 21.9% (of the population) in 2011-12 to 2.3% in 2023-24 – a decline of 19.7 percentage points over 12 years, or 1.64 percentage points per annum.”
The decline was sharper in rural areas as compared to urban. “In rural areas, where the initial poverty level in 2011-12 was higher than the national average, the reduction was 22.5 percentage points over the period, or 1.87 percentage points annually. In contrast, urban poverty declined by 12.6 percentage points, equivalent to roughly 1 percentage point per year,” states the paper.
It says that class-wise too, poverty has declined significantly across all major social groups – Scheduled Castes, Scheduled Tribes, Other Backward Classes (OBCs), and Forward Castes (FCs).
“Even among the ST population – often considered to be beyond the immediate reach of growth and redistributive programmes – poverty fell to 8.7% (of the population) in 2023-24,” the authors note.
While the rate of poverty among Hindus is estimated at 2.3%, for Muslims it is 1.5%, for Christians 5%, for Buddhists 3.5%, and for Sikhs and Jains 0%.
“Differences in extreme poverty between Hindus and Muslims have, remarkably, almost disappeared,” the paper says, adding that in rural areas, even fewer Muslims classify as poor compared to Hindus (1.6% vs 2.8%). Incidentally, in urban areas, Muslim poverty rate was 20.8% in 2011-12 compared to 12.5% among Hindus. By 2023-24, this was 1.2% and 1%, respectively.
Calling for “correction” in the perception that poverty – or at least extreme poverty – among Muslims is higher than Hindus, the paper states: “Accelerated growth over the last two decades has enabled nearly all population groups to attain consumption levels above the extreme-poverty threshold. Concentrations of extreme poverty are now largely confined to tribal populations.”
The paper further notes, “No state or Union Territory now reports a poverty rate in double digits. In three states (Himachal Pradesh, Sikkim, and Goa) and three Union Territories (Chandigarh, Delhi, and Daman and Diu), the poverty rate has declined to zero up to the first digit after the decimal point.”
Rise above poverty across all groups
The paper says that “accelerated growth over the last two decades” has enabled nearly all population groups to attain consumption levels above the extreme-poverty threshold. “Concentrations of extreme poverty are now largely confined to tribal populations.”