India Nearly Eliminates Absolute Poverty: NITI Aayog Member

Absolute poverty in India, based on the $1.9 per day income benchmark, has been nearly eradicated, with only about 1 percent of the population at this level in 2024, according to Arvind Virmani, a member of NITI Aayog.

Absolute poverty virtually eliminated, says Niti Aayog's Virmani | The Economic Times

The World Bank established three poverty thresholds in the 1960s: $1, $2, and $4 per day. These figures have since been adjusted for inflation, with the $1 benchmark now set at $1.9 per day, Virmani stated during his lecture on "A Vision of Viksit Bharat 2047." He delivered this address as part of the P V Gandhi Chair Oration at the Indian Merchants' Chamber (IMC) in Mumbai.

According to this metric, known as absolute poverty, the poverty rate has declined significantly from 12.2 percent in 2011-12 to 2.3 percent over the past 11 years, further dropping to 1 percent in 2024.

“That 1 per cent now cannot be addressed through general policy. These may be people living in the hills or remote areas. You have to go out there and find the actual individuals,” he said.

A less commonly discussed but highly intriguing aspect is the income threshold, which was previously set at $2 per day and has now been adjusted to $3.2. This percentage has significantly dropped from approximately 54% to 21% and currently stands at below 15%. Those falling within this bracket are considered part of the vulnerable population. However, this vulnerability is expected to be eradicated within the next seven years, according to a NITI Aayog member.

Discussing the economy’s opportunities, challenges, and risks, Virmani highlighted a shift in the workforce distribution over the past three decades. This demographic transition is projected to persist for another 30 to 40 years.

“In developed countries such as the United States, Western Europe, and even China, Thailand, and Russia, the share of the working-age population has been declining for the past 30 years and will continue to decline over the next 30 years. Even in countries like Indonesia, Mexico, and Vietnam, where this share increased over the past 30 years, a decline is expected.”

He added that India is the only country where the share will continue to rise slightly.

"We will essentially have a comparative advantage in human capital. We need to focus on low-skill, middle-skill, and high-skill development. If we get it right, India will be a supplier of all types of skills, from the lowest level to the highest, across the world. That is a huge opportunity,” Virmani said.

(This Article was originally published by Business Standard)