Rural Poverty Falls Under 5% For The First Time in FY24: Report

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New Delhi: Rural poverty in India has seen a remarkable decline. It dropped below 5 per cent for the first time in 2023-24 according to SBI Research. Increased rural spending played a key role in this achievement with the poverty rate falling to 4.86 per cent from 7.2 per cent the previous year and 25.7 per cent in 2011-12, as per the SBI report.

Urban poverty also saw a decline, though at a slower pace, dropping to 4.09 per cent in FY24 from 4.6 per cent the previous year. Using updated poverty line estimates and data, rural poverty in FY24 was calculated at 4.86 per cent, while urban poverty stood at 4.09 per cent.

The report credits the sharp drop in rural poverty to higher consumption growth among the bottom 5 per cent of the population, which pushed the poverty line lower. In FY23, the poverty line fell within the 5-10 per cent income bracket, but by FY24, it shifted to the 0-5 bracket, reflecting improved economic conditions for the poorest.

SBI Research noted, "It is possible that these numbers may be subject to slight revisions once the 2021 census is completed and updated rural-urban population data is released. We anticipate that urban poverty could decline further. At a national level, we estimate poverty rates in India are now between 4 per cent and 4.5 per cent, with extreme poverty nearly eliminated."

The report pointed out that better infrastructure is making it easier to move around in cities, which is helping to close the gap between rural and urban areas and reduce income inequality in rural regions. It also highlighted the growing impact of government schemes like Direct Benefit Transfer (DBT), which have played a key role in narrowing the rural-urban divide.