Development economist and labour and employment expert Santosh Mehrotra on February 27 dismissed claims that India’s poverty rate had shrunk to five per cent and that 250 million Indians had been lifted out of poverty in the past 11 years. He was speaking at the 2026 Anil Agarwal Dialogue organised by the Centre for Science and Environment (CSE) in Nimli, Rajasthan.
Mehrotra was responding to questions from Richard Mahapatra, Managing Editor of Down To Earth.
“The government currently has neither a definition of extreme poverty nor a solid basis to indicate the actual poverty line. Today, the government claims that the poverty rate in India has shrunk to 5 per cent and that approximately 250 million people have come out of poverty in the past 11 years. But these government claims are not only misleading but also far from reality and hollow,” said Mehrotra.
He added that employment in the non-agricultural sector, which used to grow at a rate of 7.5 million jobs per year, has now halved. As a result, young people are facing the brunt of unemployment and are forced to seek opportunities in agriculture through reverse migration.
“The truth is that there has been a substantial decline in non-agricultural employment, and reverse migration post-COVID-19. Eighty million people have had to return to farming. People are having to sustain their livelihoods by taking personal loans and pawning gold at record levels,” said Mehrotra.
The expert also questioned the methodology on which the government claims that India’s poverty rate has dropped to five per cent. He explained that this claim is based on the 2022-23 Consumer Expenditure Survey. However, it is important to note that the methodology of the 2011-12 survey was completely different from that of the 2022-23 survey. Therefore, one cannot derive the old poverty rate from this new data.
Answering a question, Mehrotra said, “It cannot be said that growth is not happening. But claiming that poverty has shrunk to 5 per cent is completely inaccurate. Based on the poverty lines of the Tendulkar Committee and the Rangarajan Committee, a consumption survey conducted in 2022-23 shows that poverty is around 26 per cent. So, poverty lies between 5 per cent and 26 per cent, not around 5 per cent.”
Regarding the discontinuation of the monetary poverty-based poverty line, he noted that historically, extreme poverty levels were much higher, with almost the entire population living in extreme poverty. The World Bank’s 1993 international extreme poverty line, based on Purchasing Power Parity (PPP), was about $1.08-$1.09 per day, generally measured on consumption. Today, this has risen to approximately $2.15 per day, though in India, it is no longer the standard for extreme poverty.
“For the past six decades globally, poverty was assessed based on consumption expenditure, meaning how much people spend on their necessities. This method was straightforward and comparatively reliable. Later, the Multidimensional Poverty Index (MPI) was introduced to measure poverty. This was a UNDP initiative, which India adopted after a period of external influence. MPI considers non-economic dimensions like health, education, and living standards rather than consumption surveys. This shifted attention away from monetary poverty, whereas consumption-based surveys provide a more direct measure of poverty,” noted Mehrotra
The economist added, “Consumption reflects the real-life conditions of people living at the minimum level in a society or economy.” MPI, on the other hand, does not do so.
He also spoke on government policies post-2013. Job growth rates, according to Mehrotra, dramatically fell after the National Democratic Alliance government came to power. This was followed by demonetisation, which hit the Micro, Small and Medium Enterprises and unorganised sectors, gradually slowing down economic activity. Employment is lacking, manufacturing has declined, and growth figures have deteriorated. This had a ‘knock-on’ effect, meaning one event or decision indirectly affected other sectors or individuals.
“COVID-19 impacted the world, but for the past four-five years I’ve been analysing that in FY 2021, the world economy contracted by 3.1 per cent, while India’s economy shrank by 5.36 per cent. There were two main reasons: first, the health system was poorly managed, and second, the economy was mishandled. 4.5 million people died before the vaccine arrived, even though the government claimed globally that it controlled COVID-19 due to vaccination,” said Mehrotra.
Real wages are not rising due to a lack of non-farm sector jobs. Meanwhile, the growth of the agricultural labour force indicates a lack of opportunities in non-agricultural work.
When MGNREGA started in 2003, Mehrotra explained, it increased rural wages and coincided with strong growth rates. Real wages were rising.
“I know from the inside out as to what was happening,” said Mehrotra. “MGNREGA had a dramatic impact across the economy. It raised rural wages. At the same time, because the economy began to grow rapidly and because the investment rate had risen, workers were being pulled out of agriculture. Consequently, the labour market in rural areas tightened. Real wages thus began to increase in rural areas which had a knock- on effect on urban wages. So across the economy, urban wages rose quite contrarily to what has been happening for the last 11 years.”
As a technical economist, Mehrotra finds it hard to believe that Indian poverty has shrunk to 5 per cent. “The world will not accept this claim. The truth is that the economy is running on household savings. Retail borrowing is increasing, banks are largely targeting consumers, and gold loans have hit record levels because wages are not rising, so people are pawning gold.”
Finally, he said, “In the past 25 years, we have been the second-fastest growing economy, and if we look at China, since 1995, it has increased its GDP fivefold. Therefore, the economic figures do not indicate a major success.”
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