World Bank’s poverty estimate does not pass the thali test

Why in the News

The World Bank has recently estimated “extreme poverty” in India at 2.6% of the population. A “thali index” built on the same survey data finds that roughly 30% of Indians cannot afford two meals a day, which puts the Bank’s poverty line for India in question.

What is the World Bank’s poverty estimate, and how is it calculated?

1. What it is: The estimate is a headcount ratio, the share of the population that is poor. It is like counting how many students in a class score below the pass mark.
2. Poverty line: The pass mark is the poverty line, the minimum acceptable level of consumption. Anyone below it counts as poor.
3. Survey data and goods basket: The Bank applies its line to the Household Consumption Expenditure Survey (HCES) 2023-24, which records household spending. Its report does not mention the goods and prices behind its India line.
4. The takeaway: A poverty count is only as reliable as its line, so a line set too low hides real deprivation.

What is the thali index, and what does it show?

1. Thali index: The index counts how many thalis a person can buy with the monthly per capita food expenditure the survey records. Economists Pulapre Balakrishnan and Aman Raj proposed it in 2025.
2. Why a thali: A thali is a complete meal of protein, carbohydrates and minerals that Indians relate to culturally.
3. Price used: The index prices a thali at Rs 30. Rating agency CRISIL estimated this as the 2023-24 cost of a home cooked vegetarian thali, the cheapest kind.
4. Finding: Up to 50% of rural Indians and 20% of urban Indians cannot afford two thalis a day.
5. Effect of subsidised food: Adding the value of subsidised food lowers these shares to 40% and 10%, which gives the national figure of roughly three in ten.

Why do the two measures differ when the data is the same?

1. Different yardsticks: The Bank measures income poverty, which asks whether a person’s money reaches the poverty line. The thali index reads food consumption directly from the same survey.
2. Food as a residual: Households pay rent, medicines and school fees first. Food gets what is left, so income above the line does not guarantee two meals.
3. Implication for the line: If minimum food consumption decides who is not poor, the poverty line must be high enough to secure it. The index’s authors want the Bank to rethink its India line.
4. Reach of the critique: The authors extend the objection to the Multidimensional Poverty Index (MPI) of the United Nations Development Programme (UNDP), to the extent it relies on the Bank’s line.

Why does the estimate matter for policy?

1. Complacency risk: A very low estimate tells policymakers that no action is needed. Low food consumption shows that action is urgent.
2. Accelerating food inflation: Food prices decide how much people eat. Food price inflation rose every month from January to September and trebled over the period.
3. More food at a steady price: Food inflation can be controlled only by producing more food at a steady price, which needs higher agricultural productivity.

Challenges

1. No current official line: India has not updated an official poverty line since 2011-12, so the Bank’s estimate has no domestic benchmark.
2. One national thali price: A single thali price ignores price differences across States, villages and cities.
3. Spending is not nutrition: A count of affordable thalis does not show what people actually eat.

Way Forward

1. Disclosure of the basket: The World Bank should publish the goods and prices behind its poverty line for India.
2. Food anchored poverty line: The Union government should set an official line that secures minimum food intake after other essential costs.
3. Food price policy review: The government should urgently review its food inflation policies and raise farm productivity.

Conclusion

India’s poverty count depends on where the line is drawn, and a line that ignores what households can actually spend on food understates deprivation. The line needs an anchor in food intake, and food prices need to be steadier.

Poverty Estimation in India

1. Monetary poverty lines: India’s consumption based lines came from the Lakdawala, Tendulkar and Rangarajan expert groups. The Rangarajan line was never adopted.
2. International dollar line: The World Bank’s extreme poverty line is $3.00 a day at 2021 purchasing power parity, which adjusts for local prices.
3. Multidimensional measures: NITI Aayog’s national index uses 12 indicators of health, education and living standards. The UNDP’s global index uses 10.

Matching Previous Year Question

“[2020, GS2, 15 marks] “The incidence and intensity of poverty are more important in determining poverty based on income alone”. In this context analyse the latest United Nations Multidimensional Poverty Index Report.”