In addition, the India Employment Report 2024 by the International Labour Organisation (ILO) and the Institute for Human Development notes that the urban poverty rate in India has reduced from 13.7 per cent in 2012 to 12.55 per cent in 2022. However, many experts warn of rising urban poverty, driven by increasing urbanisation, even as the proportion shows a decline.
Urban poverty and urbanisation
How do we define urban poverty and how is it related to the process of urbanisation? Urban poverty is often characterised by challenges such as high living costs, limited access to affordable housing, and inadequate sanitation and healthcare facilities that are more noticeable in industrialised cities.
In India, the understanding of poverty has a rural bias, and urban poverty is often considered a consequence of rural distress. Following economic liberalisation in the 1990s, rapid economic growth increased the demand for skilled labour in urban areas. However, uneven growth and concentration of economic benefits in certain states and regions accentuated disparities in the country. This led to the migration of people from less developed regions to more prosperous regions, contributing to the rise of urban poverty.
As of 2020-21, about one-third of India’s total population is migrants, with migrants forming 34.6 per cent of the total population in urban areas. As people move from rural areas to cities, the urban population grows along with the physical expansion of cities. This process is called urbanisation. Rapid urbanisation exerts pressure on housing, resulting in overcrowding and the proliferation of informal settlements, which contribute to the “urbanisation of poverty”.
Hence, urban poverty refers not only to the state of poverty or income deprivation but also to a lack of access to essential services such as housing, water, sanitation, health, education, livelihoods, and social security.
Urban poverty and slums
Another important aspect of urban poverty in India is its relation to slums. According to the 2011 Census definition, a slum is a cluster of about 60-70 households, regardless of legality of tenure. This contrasts with the National Sample Survey Office (NSSO) and Planning Commission’s definition of a slum as a compact settlement of at least 20 households.
According to the National Report by the Ministry of Housing and Urban Poverty Alleviation, about 23.5 per cent of urban households were slum dwellers in India in 2001. This percentage decreased to 17 per cent in 2011. However, during the same period, the total number of households in slums rose from 10.5 million to 13.75 million.
There is a tendency to equate slum populations with large and metropolitan cities. However, some studies have found that poverty in small and medium towns is often more severe and prevalent than in larger and metropolitan cities. Notably, around 62 per cent of the slum population in India is concentrated outside of big and metropolitan cities.
Therefore, discussion on urban poverty should not only be limited to slums. Experts have argued that clusters with fewer than 60 households, excluded from the definition of slums, often house some of the most vulnerable residents. This exclusion results in a significant undercounting of the number of slums in India.
Moreover, these excluded clusters with poor households and settlements also tend to be located in environmentally hazardous areas like flood-prone low-lying areas, river banks, the sides of sewage drains, railway tracks, hillsides prone to landslides, waste dumps, or near polluting factories. More than half of urban poor families live in spaces smaller than the size specified for an ideal prison cell. Consequently, the urban poor are more likely to be exposed to environmental disasters as well as to the impact of climate change.
Urban poverty and informality
Urban poverty is also closely related to the kind of jobs the urban poor do. According to a 1972 ILO report, which popularised the concept of “informal sector”, migrant and urban dwellers are often absorbed in small-scale activities when the modern sector cannot create enough job opportunities. The informal sector is characteristised by easy entry, small-scale operations, labour-intensive tasks, use of local and adapted technology, skills acquired outside the formal education system, and unregulated, competitive markets.
Examples of informal sector jobs include home-based workers, domestic workers, petty traders, street vendors, coolies, porters, small artisans, barbers, and gig economy workers. The informal sector is often large and dynamic.
An estimated 80 per cent of all workers in urban areas are employed in the informal sector. These jobs are mostly low-paying, insecure, and without benefits like health insurance, pensions, or job stability. These economic activities are not regulated by the government. In addition, these jobs also have caste, religion, and gender dimensions.
Decline in inequality?
According to the NSSO’s Household Consumption Expenditure report, both rural and urban inequality in India has declined. The decline was found to be less in rural areas as compared to urban areas. The report highlights that the top 10 per cent of urban households account for 25.7 per cent of overall consumption expenditure in 2022-23 as compared to 29.7 per cent in 2011-12. However, the share of the bottom 50 per cent in consumption expenditure is 28.6 per cent.
This is in contrast to findings by other experts who have claimed that inequality in India has increased. It has also been noted by some experts that NSSO data undercounts the wealthiest households, thereby underestimating the consumption inequality. For instance, the average monthly per capita expenditure of the top 5 per cent of urban households was reported as only Rs. 20,824.
Irrespective of the skepticism over data, both rural and urban poverty in India need a nuanced understanding. While rural poverty has been a persistent policy concern, there have been schemes like Pradhan Mantri Awas Yojana – Urban, Jal Jeevan Mission – Urban, Deendayal Antyodaya Yojana – National Urban Livelihoods Mission, etc. designed for the urban poor. These initiatives aim to address issues like housing, drinking water, sanitation as well as gainful self-employment and skilled wage employment opportunities.
However, the difficulty of estimating the informal sector as well as slums becomes a pertinent issue in capturing urban poverty. Therefore, the expansion of social protection and safety nets may need to be prioritised. Furthermore, few studies in India have found that some households registered under the schemes often do not get the benefits or are not aware of them. Female workers are more unlikely to get benefits from these schemes. Hence, adopting a broader perspective in policy execution might help ensure that urban poverty alleviation efforts are inclusive and effective.
Post Read Questions
How has migration from less developed regions to prosperous regions contributed to urban poverty?
What are the economic and social implications of rural-to-urban migration on urban poverty?
What role did uneven economic growth and regional disparities play in the rise of urban poverty post-liberalization?
What are the key characteristics of jobs in the informal sector? Why are migrants and urban dwellers often absorbed into small-scale activities in the informal sector?
(Ritwika Patgiri is a doctoral candidate at the Faculty of Economics, South Asian University.)
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An important aspect of urban poverty in India is its relation to slums. (Archive) 
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