Study contradicts government claims, showing poverty may be five times higher

Contrary to the NITI Aayog CEO's claim attributing the 2022–23 Household Consumption Expenditure Survey (HCES) report to a significant decline in poverty, an alternative analysis has revealed a starkly different reality.

While B.V.R. Subrahmanyam, CEO of NITI Aayog, asserted that the poverty headcount ratio had dropped to as low as 5% of the population, based on inflation-adjusted poverty lines, experts using the Rangarajan Method found that 26.4% of Indians remain below the poverty line, according to an analytical report published in The Wire.

The discrepancy between the government’s claims and the findings of the Rangarajan Method stems from differences in poverty estimation methodologies. The government’s approach, which adjusts the 2011–12 poverty line for inflation, fails to account for the rising costs of non-food essentials such as healthcare, education, and housing, while the Rangarajan method offers a more comprehensive approach by updating nutritional norms and considering a broader consumption basket.

This methodology, which includes essential non-food expenditures, paints a more accurate picture of current living conditions, revealing a much higher poverty rate than the government claims.

The analysis reveals that 27.4% of the rural population, with a cut-off of Rs 2,515 per capita per month, and 23.7% of the urban population, with a cut-off of Rs 3,639 per capita per month, remain below the poverty line, sharply contrasting with the government's claims of near-eradication and raising questions about the accuracy and intent of its statistics.

The Rangarajan Committee, established in 2012, proposed a new poverty estimation methodology that incorporates food expenditure, essential non-food expenditure, and additional expenses related to food adequacy. The committee’s recommendations, however, were not officially adopted by the government, which continued to use outdated poverty lines.

The latest HCES data, released after a decade-long gap from the previous survey, further illustrates the limitations of the government’s approach. By adjusting older poverty lines for inflation, the government assumes that the prices of goods consumed by the poor increase in line with general inflation, which research has shown is not the case, as the poor face higher costs for essential goods and services.

While poverty alleviation programs such as the Public Distribution System (PDS) remain crucial, they focus primarily on food security, neglecting broader aspects of poverty such as healthcare and education.

The stagnation of wages in rural areas, along with a decline in the energy consumption of the poorest rural quartile, indicates that rising nominal incomes have not translated into improved living conditions. This underlines the failure of current poverty estimation methods to reflect the true extent of deprivation.