Context: 

After the World Bank raised the poverty line to $3 a day, India's extreme poverty rate declined from 27.1% in 2011–12 to 5.3% in 2022–23.

More on the News:

• In absolute terms, people living in extreme poverty fell from 344.47 million to just 75.24 million, the latest data from the World Bank shows.

• As global prices rose, the World Bank gradually raised its poverty line, increasing it to $3 a day in June 2025.

Poverty Line:

• It is the level of income used as a cut-off point for deciding who is poor in any economy. 

• It represents the minimum income level necessary to meet basic needs, and varies across countries depending on their overall economic conditions.

• Uses of Poverty Line: 

• To help them gauge the extent of poverty and shape welfare policies for the poor.
• To assess if policies have effectively reduced poverty and improved well-being over time.

India’s Poverty Line: 

• Historically, India had been a leader in poverty estimation and India’s poverty line methodology and data collection influenced the rest of the world in how to study poverty.

• India’s last officially recognised poverty line was in 2011-12. It was built on a 2009 formula suggested by the Tendulkar committee. Since then, there has been no update on the method.

• In 2014, the Rangarajan committee proposed a new poverty measurement method, but it wasn’t adopted. Since then, India has relied on NITI Aayog’s multidimensional index or the World Bank’s poverty line.

• Before the Tendulkar report, India’s 2009 poverty line was set at ₹17/day for urban and ₹12/day for rural areas.

• In 2009, Tendulkar raised the poverty line to Rs 29 per day per person in urban areas and Rs 22 per day per person in rural areas, and later to Rs 36 and Rs 30, respectively, in 2011-12.

• In 2014, Rangarajan recommended raising the domestic poverty line to Rs 47 per person per day in urban areas and Rs 33 in rural areas.

World Bank’s Poverty Line:

• The first global poverty line was set at $1 a day in 1990, based on PPP-adjusted poverty lines from the poorest countries.

• PPP rates equalize prices across countries. In the 1980s, six poor countries had poverty lines around $1/day (1985 prices), forming the basis of the first global poverty line.

• According to the latest World Bank Report: 

o Despite the updated $3 poverty line (2021 prices), India has fared well, with poverty rising modestly from 2.3% to 5.3% in 2022–23. 

o Adjusting the $2.15 line for 2017–2021 inflation raises it to about $2.60 still below the new $3 benchmark.

o The share of Indians below the revised $4.20/day LMIC poverty line fell from 57.7% in 2011–12 to 23.9% in 2022–23, with numbers dropping from 732.5 million to 342.3 million.

o India’s 2023 population at 1,438.07 million using its development database and consumption survey.

Global Multidimensional Poverty Index 

• The 2024 Multidimensional Poverty Index was published by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP). It was first launched in 2010.

• Traditional poverty measures are based on income or minimum expenditure levels, known as poverty lines.

• The MPI takes a broader approach, tracking overlapping deprivations across key SDG-related indicators to support the goal of ending poverty in all forms.

• The Global MPI uses 10 indicators covering three main areas. These three dimensions have one-third weight each in the final index.

o Health: It includes nutrition and child & adolescent mortality indicators.

o Education: It includes years of schooling and school attendance indicators.

o Standard of living: It includes six household-specific indicators: housing, household assets, type of cooking fuel, access to sanitation, drinking water, and electricity.

• The report notes that while low-HDI countries have the highest poverty levels, many poor people also live in medium-HDI countries like India.

• The five countries with the most people in poverty are India (234 million, medium HDI), and Pakistan, Ethiopia, Nigeria, and the DRC (all low HDI).

• India’s MPI value is 0.069. The lower MPI values represent a better performance regarding multidimensional poverty. The higher MPI value is of Niger, 0.601 and the lowest is of Serbia with an MPI value of 0.

National Multidimensional Poverty Index

• NITI Aayog, the apex public policy think tank of the Indian government, in collaboration with the UNDP and OPHI, developed a National Multidimensional Poverty Index to monitor multidimensional poverty at national, state, and district levels in the country.

• It comprises three equally weighted dimensions – health, education, and standard of living. 

• These three dimensions are represented by 12 indicators, namely nutrition, child and adolescent mortality, maternal health, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, assets, and bank accounts.

• The NITI Aayog has estimated that India’s population living in multidimensional poverty fell to 11.28 per cent in 2022-23 from 29.17 per cent in 2013-14.