Rural poverty ratio nosedives to 4.86% from 25.7% in 12 yrs

New Delhi: India's rural poverty ratio has registered a dramatic decline to 4.86 per cent in the financial year 2023-24 from 25.7 per cent in 2011-12 while urban poverty has fallen to 4.09 per cent from 4.6 per cent during this period, according to an SBI Research report released on Friday.

"At an aggregate level, we believe poverty rates in India could now be in the range of 4 per cent-4.5 per cent with almost minimal existence of extreme poverty," the report said.

"The sharp decline in the rural poverty ratio is on account of higher consumption growth in the lowest 0-5 per cent decile 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,” the report states.

Based on 2023-24 fractile distribution, the sample proportion for poverty in rural areas is 4.86 per cent and 4.09 per cent in urban areas in FY24. This is also significantly lower than FY23 estimates of rural poverty at 7.2 per cent and urban poverty at 4.6 per cent, according to the report.

"It is possible that these numbers could undergo minor revisions once the 2021 census is completed and the new Rural-Urban population share is published. We believe Urban poverty could decline even further," the report said.

One of the reasons for the increasingly shrinking horizontal income gap between rural and urban and the vertical income gap within rural income classes is the enhanced physical infrastructure is scripting a new story in rural mobility, according to the report.