How Centre's big claims on poverty, equality lack independent data

Poverty more manageable

There was also a newspaper article by economists C Rangarajan and Mahendra Deve, in May 2025, making similar points but theirs was ignored.

The article said India’s poverty “declined from 29.5 per cent in 2011-12 to 9.5 per cent in 2022-23 and to 4.9 per cent in 2023-24” and “most of the poor are around the poverty line – this makes poverty more manageable”.

Also read: Congress slams Centre over World Bank report on poverty, inequality in India

About inequality in consumption (Gini Index) also it marked a similar decline but didn’t explain an anomaly it described as “surprising to see”: the quantum of decline in inequality in consumption in the one year between 2022-23 and 2023-24 was “almost similar” to that in 11 years between 2011-12 and 2022-23.

Incidentally, Dev was appointed chairman of the Prime Minister’s Economic Advisory Council (EAC-PM) a week after their report was published.

The third report the Centre cited to claim improvements in social security cover was an ILO’s report and data entry, both under “SDG indicator” for the population – not workers. The data entry for 2025 is only for India – all others are available up to 2023.

It showed, India’s “population covered by at least one social protection benefit” was 48.4 per cent in 2022 and 64.3 per cent in 2025.

Selective quoting

The Centre quoted the World Bank report to claim “India’s triumph in combating poverty”, although it cited the “extreme poverty” line of $2.15, 2017 PPP for this, instead the LMIC poverty line of $3.65, 2017 PPP applicable to India (showing India had 28.1 per cent poor in 2022-23).

It also quoted this report to say that India was “the fourth most equal country” and its inequality was “much lower” than China’s 35.7 and the US’s 41.8 (on the Gini Index); India was “more equal than every G7 and G20 country”.

As for the ILO report, the Centre claimed, “ILO acknowledges a tremendous surge in India’s social protection coverage from 19 per cent in 2015 to 64.3 per cent in 2025”, attributing it to the extended health insurance, pensions, and employment support.

It also cited the data entry to claim later that India saw “the fastest expansion in social protection coverage worldwide”, “now ranks second in world” and “provides social protection coverage to more than 94 crore (940 million) citizens”.

Also read: India’s extreme poverty down to 5.3 pc in 2022-23: World Bank

World Bank’s claims questionable

Oddly enough, the World Bank’s brief didn’t explain how or why the dramatic reduction in poverty and inequality happened, except for saying – without citing evidence – that “employment growth has outpaced the working-age population since 2021-22”.

It was silent on the three big economic shocks – demonetisation (2016), GST (2017) and overnight national lockdown (2020) – which hurt poor households and small businesses badly and damaged the informal economy they fall in. The informal sector accounts for about 50 per cent of national income (GDP) and about 90 per cent of jobs (more of it later).

Also read | Two Indias: One buys Rolls, other struggles to pay school fees, says data

The World Bank did flag the shortcomings in using the HCES data of 2011-12 and 2022-23, citing their lack of comparability due to the changes in methodology. But it was silent on “conceptual and practical problems” inherent to its own methodology – which it flags in its “overview” on international poverty and inequality estimates and comparisons – which is, the absence of national poverty line in India.

In its “overview”, it says that “countries define and measure poverty differently”, reflecting “local perceptions of what is needed to be considered not poor”, “anchored to the cost of a food basket…that provides adequate nutrition for good health and normal activity, plus an allowance for nonfood spending”.

It also pointed out that national poverty lines “tend to have higher purchasing power in rich countries”.

National poverty line

Thus, until India fixes its national poverty line to set a minimum standard of living for its citizens to ensure a life with dignity, the World Bank’s PPP model would give a misleading picture on poverty reduction. For example, even the “extreme poverty” line of $2.15 (which the Centre quotes) at 2025 PPP (as against 2017 in the World Bank’s report) – which is ₹20.66/USD, per the IMF – works out to ₹44.

At the per capita per day expenditure of ₹44, it is a small amount to ensure nutritious food and also (non-food) house rent, clothes, healthcare and education).

Also read: Why claims of India reducing poverty are just a clever selection of data

India last framed its national poverty line for 2004-05 (Tendulkar’s) in 2009. The Rangarajan Committee’s poverty line for 2011-12 (higher than Tendulkar’s inflation-indexed by the Planning Commission for 2011-11 was not accepted by the Centre. The Centre had assured the Parliament to fix a new one a decade back but hasn’t done so yet.

Why HCES is problematic

The use of HCES, unlike income surveys in developed countries, is not right for several reasons.

Consumption expenditure isn’t the same as income, and hence, not suitable to measure poverty and inequality. It carries freebies (imputation value) like the “free” ration to 813.5 million (over 60 per cent population) and also ₹6,000 of the PM-Kisan and subsidised LPG cylinders at ₹200 to over 100 million households in both the case – inflating consumption expenditure data. The freebies are not incomes.

Though not studied in India, household surveys in the US and Europe have been found to be lacking in providing credible data because the rich and wealthy refuse to participate (“differential non-response”) and both the rich and poor indulge in denial of benefits for their own different reasons.

Besides, the HCES uses randomised samples which is unlikely to capture the few richest (Hurun India Rich List 2024 found 1,539 individuals worth ₹1,000 crore or more in 2024 had “accumulated wealth” of ₹159 lakh crore or “more than half of India’s GDP”).

Also read | Why claims of India reducing poverty are just a clever selection of data

The income gap between the rich and poor are also widening rapidly. Per the World Inequality Report of 2024, income share of the top 10 per cent Indians went up from 56.1 per cent in 2014 to 57.7 per cent in 2022, while that of the rest 90 per cent went down from 43.9 per cent to 42.3 per cent.

The World Inequality report is more credible because it also uses Income Tax data, unlike others.

The best way for India is to conduct household income surveys and supplement those with income tax and digital transaction data to measure poverty and inequality.

Not independent study

The Rangarajan-Dev article is entirely based on the official data. It is tentative in explaining why poverty and inequality declined by saying: “GDP growth could be a proximate reason”.

But this isn’t convincing since the 2011-12 GDP data faces credibility crisis due to overestimation of growth, frequent retrospective revisions and manipulated back series data – as The Federal explained in How not to revise GDP base year to bring back credibility to data.

Their article mentions “safety nets” and fall in inflation but dismisses both as insignificant factors. For the record, the Rangarajan-Dev’s poverty line is per capita per day expenditure of ₹61 for rural and ₹87 for urban areas in 2022-23 and ₹65 and ₹91, respectively, in 2023-24.

Multiple key official data ignored

There are multiple official data which could have been used for independent assessments.

Apart from the dramatic rise in personal loans for consumption (overtaking bank credits to industry, services and agriculture for many years), distress mortgaging of gold, freebies to more than 60 per cent of population and regressive tax system etc. that The Federal had listed in Why claims of India reducing poverty are just a clever selection of data, here are a few more:

• Household savings dropped from 23.6 per cent of GDP in FY12 to 18.1 per cent in FY24 and household debts (annual change or “flow”) went up from 3.3 per cent of GDP to 6.2 per cent in FY24. Household net financial assets plunged to more than 40 years low of 5 per cent of GDP in FY23 and 5.3 per cent in FY24 (all current prices), per the National Account Statistics.
• “Stock” value of household debt (total debt, not the flow or annual changes) went up to 49.1 per cent of GDP in December 2024, from around 34 per cent in March 2019 (current prices) and per capita debt of individual borrowers went up by ₹1 lakh in two fiscals of FY23 and FY25 – from ₹3.9 lakh in March 2023 to ₹4.8 lakh in March 2024 (Financial Stability Report of June 2025).
• Large and growing informal economy: An Indian government report of 2012 said, the informal sector accounted for “more than 90 per cent of workforce and about 50 per cent of the national product (GDP)”. In FY23, its contribution to GDP was 45 per cent and its job share was 88 per cent (without any social security cover) in 2023-24 (PLFS 2023-24).
• The Annual Surveys of Unincorporated Sector Enterprises (ASUSE) of 2021-22 and 2022-23 showed 88 per cent hired hands - informal workers with no social security cover in 2021-22, which went up to 92.9 per cent in 2022-23.

Social security

The last one is also important because the Centre citing the ILO report gave an impression that the rise in social security is for workers, and based on the ILO’s assessments, while the ILO clearly says it was “mainly” Indian government’s data (“Based on available data mainly from central government schemes; including school feeding programme(s) and other food benefits for children”).

Meanwhile, the three labour codes, passed in 2019 and 2020, promising universal minimum wages and social security cover to all, including informal workers like platform/gig workers, are yet to be operationalised.

As for the Centre’s claim of providing social security to 940 million citizens, 813.5 million of them get “free” ration (or 86.5 per cent) – which isn’t something to be proud of for the fourth largest economy aspiring to build a Viksit Bharat @2047 (developed nation).