MAINS Current Affairs includes Poverty in India: Measurement, Regional Disparities and Policy Challenges & India–Australia Relations: Bridging the Trade and Trust Gap

ECONOMY

1. Poverty in India: Measurement, Regional Disparities and Policy Challenges

Context: After a gap of more than a decade, the Ministry of Statistics and Programme Implementation (MoSPI) released the Consumer Expenditure Surveys (CES) for 2022–23 and 2023–24. The release has renewed discussions on poverty estimation, poverty-line methodology, and the actual scale of deprivation in India.

Understanding Poverty in India

• Poverty refers to the inability of individuals or households to meet basic consumption requirements related to food, healthcare, education, housing, other essential needs.
• Despite significant economic growth and expansion of welfare programmes, poverty remains unevenly distributed across regions and social groups.
• India has reduced poverty substantially through:
  • economic growth,
  • Public Distribution System (PDS),
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA),
  • Direct Benefit Transfers (DBT),
  • social protection programmes,
  • improved access to housing, sanitation, and electricity.
• However, poverty continues to display three major characteristics:

Structural Nature

• Poverty remains linked to low productivity, inadequate employment opportunities, weak human capital formation.

Regional Concentration

• Poverty is concentrated in specific states and districts rather than being uniformly distributed.

Intergenerational Persistence

• Poor education, health outcomes, and limited skills often transmit poverty from one generation to the next.

Methods of Measuring Poverty in India

Consumption Expenditure Approach

• India primarily measures poverty using Monthly Per Capita Consumer Expenditure (MPCE) derived from household consumption surveys conducted by NSSO/MoSPI.
• The method assesses whether individuals can afford a minimum basket of goods and services necessary for basic living.

Major Poverty Estimation Committees

• Alagh Committee
  • First official poverty estimation committee.
  • Based on calorie norms:
    • 2400 calories/day in rural areas,
    • 2100 calories/day in urban areas.
  • Lakdawala Committee
    • Continued the calorie-based methodology.
    • Introduced state-specific poverty lines.
  • Tendulkar Committee
    • Shifted focus from calorie intake to broader consumption expenditure.
    • Included expenditure on:
      • health,
    • Became the most widely used methodology for official poverty estimates.
  • Rangarajan Committee
  • Recommended higher poverty thresholds:
    • ₹972 per capita per month in rural areas,
    • ₹1,407 per capita per month in urban areas (2011–12 prices).
  • The basket covered food, clothing, rent, education, healthcare, transport, other necessities.

Current Poverty Estimates

• Using the Rangarajan methodology updated with recent CES data:

Poverty Line (2023–24)

• Rural India
  • ₹2,802 per person per month
  • ₹93.4 per day
• Urban India
  • ₹3,778 per person per month
  • ₹126 per day
• Estimated Poverty Ratio
  • Rural poverty: 29%
  • Urban poverty: 22%
  • Overall poverty: 26.8%

Number of Poor

• Approximately 374 million people are estimated to be living below the poverty line and may require subsistence-based support measures.

International Poverty Line vs Indian Estimates

World Bank Poverty Line

• In June 2025, the World Bank set the International Poverty Line at $3 per day (PPP adjusted).
• This is roughly equivalent to ₹60 per day in India.
• Using this benchmark, only about 5.3% of India’s population would be classified as poor.

Economic Survey Estimates

• Using the Tendulkar methodology, poverty reportedly declined from:
  • 9% in 2011–12
  • to 2.3% in 2023–24.

Regional and Structural Nature of Poverty

High-Poverty States

• States such as Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal account for nearly 48% of India’s poor despite having less than 40% of the country’s population.

States with Very High Poverty Levels

• Poverty exceeds 45% in Jharkhand, Chhattisgarh, Odisha.

Concentration of Poverty

• Nearly 80% of India’s poor reside in Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal, Jharkhand, Chhattisgarh, Assam, Maharashtra, Rajasthan.

Subsistence Agriculture Regions

• States such as Bihar, Uttar Pradesh, and Assam face:
  • low agricultural productivity,
  • fragmented landholdings,
  • seasonal employment,
  • limited diversification.

Mineral-Rich but Poor Regions

• States such as Jharkhand, Chhattisgarh, Odisha, and Rajasthan continue to struggle with:
  • the resource curse,
  • displacement,
  • weak industrialisation,
  • poor human development outcomes.

Major Government Measures to Reduce Poverty

• Food Security Programmes
  • National Food Security Act (NFSA)
  • PM Garib Kalyan Anna Yojana (PMGKAY)
• Employment Generation
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
  • PM Vishwakarma Scheme
  • Direct Benefit Transfer (DBT)
  • JAM Trinity (Jan Dhan–Aadhaar–Mobile)
• Financial Inclusion
  • Pradhan Mantri Jan Dhan Yojana (PMJDY)
  • Pradhan Mantri Mudra Yojana (MUDRA)
• Housing and Basic Services
  • Pradhan Mantri Awas Yojana (PMAY)
  • Jal Jeevan Mission
  • Swachh Bharat Mission
  • Saubhagya Scheme
• Health and Nutrition
  • Ayushman Bharat Pradhan Mantri Jan Arogya Yojana
  • POSHAN Abhiyaan
  • Integrated Child Development Services (ICDS)
• Education and Skill Development
  • Samagra Shiksha Abhiyan
  • Skill India Mission
  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
• Agriculture and Rural Development
  • PM-KISAN
  • e-NAM
  • Pradhan Mantri Krishi Sinchai Yojana (PMKSY)
  • National Rural Livelihood Mission (NRLM)
• Aspirational and Backward District Initiatives
  • Aspirational Districts Programme
  • District Mineral Foundation (DMF)
• Social Security Measures
  • PM Shram Yogi Maandhan
  • Atal Pension Yojana
  • e-Shram Portal

Conclusion

India has made significant progress in reducing poverty through economic growth and welfare interventions. However, poverty remains deeply rooted in structural inequalities, regional imbalances, low productivity, and limited opportunities. Addressing poverty sustainably will require a combination of inclusive growth, human capital development, employment generation, targeted welfare measures, and region-specific development strategies to ensure that economic progress benefits all sections of society.

INTERNATIONAL RELATIONS

2. India–Australia Relations: Bridging the Trade and Trust Gap

Context: The visit of Penny Wong to India for the Quad Foreign Ministers’ Meeting has renewed discussions on concluding a comprehensive India–Australia Comprehensive Economic Cooperation Agreement (CECA).

Overview of India–Australia Relations

• India and Australia share longstanding ties based on:
  • Commonwealth membership,
  • democratic values,
  • cricket diplomacy,
  • strong people-to-people connections.
• Despite these commonalities, bilateral relations remained limited for several decades due to Cold War dynamics and differing strategic priorities.
• Relations began strengthening significantly after the early 2000s due to:
  • India’s economic liberalisation,
  • convergence in Indo-Pacific interests,
  • shared concerns regarding China’s growing assertiveness,
  • expanding cooperation under the Quad framework.

Major Milestones

• Key developments that strengthened bilateral ties include:
  • Civil Nuclear Agreement (2014), enabling uranium exports to India.
  • Comprehensive Strategic Partnership (2020).
  • Economic Cooperation and Trade Agreement (ECTA), 2022.
  • Ongoing negotiations for the Comprehensive Economic Cooperation Agreement (CECA).

Present Status of India–Australia Relations

• Trade and Economic Relations
• Following ECTA, bilateral merchandise trade increased substantially from:
  • US$12.2 billion in FY21
  • to US$24.1 billion in FY25.
• Services trade has crossed US$10 billion.
• Under ECTA:
  • Australia provides nearly 100% market access to Indian exports.
  • India has offered tariff concessions on around 70% of tariff lines, covering nearly 91% of trade value.
• Investment Relations
  • Indian investment in Australia is approximately US$32 billion.
  • Australian Foreign Direct Investment (FDI) in India stands at around US$18 billion.

Strategic and Defence Cooperation

• Both countries cooperate through Quad, Indo-Pacific Economic Framework, East Asia Summit.
• Defence cooperation includes AUSINDEX naval exercises, maritime domain awareness initiatives, logistics support agreements.

Education and Diaspora

• Indian students constitute one of the largest groups of international students in Australia.
• The education sector remains a major contributor to Australia’s services exports and serves as a strong people-to-people bridge.

Key Dimensions of India–Australia Relations

• Trade and Economic Cooperation
  • The ECTA has significantly expanded trade between the two countries.
  • The proposed CECA seeks to improve market access, increase investment flows, reduce non-tariff barriers, strengthen resilient supply chains.
  • India views Australia as a trusted Indo-Pacific partner, a key supplier of critical minerals, an important partner in technology and clean-energy cooperation.

Strategic and Indo-Pacific Cooperation

• Both nations support:
  • a free, open, and inclusive Indo-Pacific,
  • a rules-based maritime order,
  • freedom of navigation.
• Cooperation has expanded through:
  • Quad initiatives,
  • cybersecurity collaboration,
  • counter-terrorism efforts.

Clean Energy and Critical Minerals

• Australia possesses significant reserves of lithium, cobalt, rare earth minerals.
• These resources are vital for India’s energy transition, electric vehicle ecosystem, renewable energy goals.
• Both countries are increasingly cooperating in green hydrogen, solar energy, resilient supply chains.

Agriculture and Food Security

• Agriculture remains one of the most sensitive areas in CECA negotiations.
• India has traditionally protected its agricultural sector in trade agreements because of:
  • small and fragmented landholdings,
  • dependence on monsoon rainfall,
  • livelihood concerns of millions of farmers,
  • food security considerations.
• Australia seeks greater access to Indian markets for wheat, dairy products, pulses, other agricultural commodities.

Core Issues and Challenges

Trade Imbalance

• Australian exports account for nearly two-thirds of bilateral merchandise trade.
• This has created concerns regarding:
  • unequal benefits from ECTA,
  • limited diversification of Indian exports.

Agricultural Sensitivities

• The agricultural structures of India and Australia differ considerably:

• These differences make agricultural liberalisation politically and economically sensitive for India.

Demand for Greater Market Access

• Australia seeks broader access to Indian markets in agriculture, dairy, agri-processing sectors.
• India remains cautious because of potential social and political implications for farmers.

Non-Tariff and Regulatory Barriers

• Trade continues to face obstacles related to biosecurity regulations, phytosanitary standards, certification requirements.
• Indian agricultural exports often encounter regulatory hurdles in developed markets.

Limited Australian Investment in India

• Despite growing trade relations, Australian investment in India remains relatively modest compared to India’s investments in Australia.

Way Forward

Move from Market Access to Economic Complementarity

• Rather than focusing only on tariff reductions, CECA should encourage technology transfer, investment partnerships, integrated supply chains.

Expand Agricultural Cooperation Beyond Tariffs

• Both countries should mutually recognise standards, develop digital certification systems, strengthen quarantine cooperation.
• This can facilitate agricultural trade while safeguarding vulnerable farmers.

Promote Agri-Technology Partnerships

• Australia can contribute through precision agriculture technologies, cold-chain infrastructure, water management systems, climate-resilient farming techniques.
• Initiatives such as the India–Australia Smart Farm Network are positive examples.

Strengthen Cooperation in Critical Minerals and Energy

• Long-term collaboration in lithium supply chains, renewable energy, green hydrogen, can improve economic and strategic security for both countries.

Deepen Educational and People-to-People Links

• Greater cooperation among universities, research institutions, skill-development centres can strengthen long-term societal and economic integration.

Conclusion

India and Australia have transformed their relationship from a limited partnership into a multifaceted strategic collaboration encompassing trade, defence, education, critical minerals, and Indo-Pacific security. Successfully concluding the CECA while addressing concerns related to agriculture, trade imbalance, and regulatory barriers will be crucial for unlocking the full potential of this growing partnership.

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