Estimation of Poverty Rate in India
The National Sample Survey (NSS) Office published a household consumption survey in February 2024, allowing for poverty rate estimation in India after a decade. The World Bank's April 2025 estimate highlighted a significant reduction in poverty, with extreme poverty dropping from 16.2% in 2011-12 to 2.3% in 2022-23. This suggests near elimination of extreme poverty in India.
Approaches to Poverty Measurement
- Conventional Approach: Focuses on income required for a specific calorific intake.
- Alternative Approach: Considers broader food consumption aspects, like nutrition and satisfaction.
The concept of a "thali meal," balancing carbohydrates, protein, and vitamins, is proposed to measure real food consumption.
Food Deprivation in India
Despite a low poverty rate, food deprivation is significant. In 2023-24, up to 50% of the rural population and 20% of the urban population couldn’t afford two thalis per day, indicating greater food deprivation than World Bank figures suggest.
The Role of Public Distribution System (PDS)
Impact on Household Expenditure
Households don’t spend all income on food; other necessities reduce food expenditure. PDS is thought to address food deprivation, but adjustments show 40% rural and 10% urban populations can’t afford two thalis daily.
Subsidy Analysis
- Subsidies are accessed by both those needing and not needing support.
- In rural India, subsidies are less progressive compared to urban areas.
Policy Recommendations
Restructuring Food Subsidy
- Increase subsidy at lower income levels, eliminate it at higher levels.
- Current cereal consumption is uniform across income levels, limiting PDS effectiveness in reducing food deprivation.
Expanding PDS to Pulses
Given disparity in pulses consumption, PDS can focus on equalizing this, as pulses are a key protein source and expensive. Reducing cereal entitlement for wealthier segments can finance this expansion, addressing the needs of the poorest effectively.
Conclusion
Current PDS is inefficient, spreading resources thin. A restructured PDS focusing on pulses and reducing unnecessary cereal subsidies can equalize food consumption across India, benefiting the poorest significantly.