The World Bank Revised the Global Poverty Line
Kartavya Desk Staff
Source: LM
Context: The World Bank revised the global poverty line to $3/day (PPP 2021) from $2.15/day (PPP 2017) based on updated price data and survey methods.
About The World Bank Revised the Global Poverty Line:
• What Is the Global Poverty Line?
• A poverty line defines the minimum daily spending needed for basic needs like food, clothing, and shelter. The global poverty line is adjusted using Purchasing Power Parity (PPP) to allow comparison across countries regardless of currency value.
• A poverty line defines the minimum daily spending needed for basic needs like food, clothing, and shelter.
• The global poverty line is adjusted using Purchasing Power Parity (PPP) to allow comparison across countries regardless of currency value.
• How Is Poverty Rate Determined?
• Poverty is measured as the percentage of people living below a certain daily expenditure level (e.g., $2.15/day). The World Bank uses household consumption data, adjusted for PPP and inflation, to calculate national and global poverty rates.
• Poverty is measured as the percentage of people living below a certain daily expenditure level (e.g., $2.15/day).
• The World Bank uses household consumption data, adjusted for PPP and inflation, to calculate national and global poverty rates.
• The new estimate reflects richer consumption data and updated cost of living, especially in countries like India. Extreme poverty line is now based on the median poverty line for low-income countries.
• The new estimate reflects richer consumption data and updated cost of living, especially in countries like India.
• Extreme poverty line is now based on the median poverty line for low-income countries.
• Implications For India:
• Sharp Drop in Extreme Poverty: Under the old $2.15 line, 2.4% of Indians were poor in 2022. The new $3 line increases this to 5.3%, but it’s still a major drop from 16.2% in 2011–12. Data Shift: The shift is driven by the first official CES survey in 11 years (2022–23), which shows higher consumption patterns, indicating improved living standards. Moderate Poverty Still Significant Under the $4.20/day line (for lower-middle-income countries), 23.9% of Indians were poor in 2022 — showing that moderate poverty remains a concern. Global Comparison Better Reflects Indian Progress: India’s progress is more visible with new PPP-adjusted benchmarks and better domestic data integration into global metrics. Caution in Comparison: Direct comparison with older surveys (like 2011–12 CES) is not advisable due to different methodologies and inflation adjustments.
• Sharp Drop in Extreme Poverty: Under the old $2.15 line, 2.4% of Indians were poor in 2022. The new $3 line increases this to 5.3%, but it’s still a major drop from 16.2% in 2011–12.
• Data Shift: The shift is driven by the first official CES survey in 11 years (2022–23), which shows higher consumption patterns, indicating improved living standards.
• Moderate Poverty Still Significant Under the $4.20/day line (for lower-middle-income countries), 23.9% of Indians were poor in 2022 — showing that moderate poverty remains a concern.
• Global Comparison Better Reflects Indian Progress: India’s progress is more visible with new PPP-adjusted benchmarks and better domestic data integration into global metrics.
• Caution in Comparison: Direct comparison with older surveys (like 2011–12 CES) is not advisable due to different methodologies and inflation adjustments.