India has lifted 171 million people out of extreme poverty between 2011–12 and 2022–23, with the poverty rate falling from 16 per cent to just 2.3 per cent, according to new estimates released by the World Bank. The multilateral lender attributed the substantial decline to improvements in consumption, a narrowing rural-urban gap, and multidimensional gains in living standards.
In its latest brief on poverty and equity, the World Bank assessed poverty using the $2.15-a-day purchasing power parity (PPP) threshold. It found that rural extreme poverty had dropped from 18.4 per cent to 2.8 per cent, while urban extreme poverty declined from 10.7 per cent to 1.1 per cent. The rural-urban gap in poverty levels has narrowed significantly from 7.7 to 1.7 percentage points, marking an annual fall of 16 per cent in this divide.
When evaluated against the $3.65-a-day poverty line, applicable to lower- and middle-income countries (LMIC), India’s poverty rate fell from 61.8 per cent to 28.1 per cent, effectively pulling 378 million people out of poverty. Rural poverty under this metric declined from 69 per cent to 32.5 per cent, while urban poverty was reduced from 43.5 per cent to 17.2 per cent. The rural-urban gap at this threshold also fell — from 25 to 15 percentage points — with a 7 per cent annual decline.
Meanwhile, in 2024, almost 129 million Indians lived in extreme poverty, which could be defined as having less than $2.15 (about Rs 181) a day, according to the World Bank. However, it is a significant decrease from 431 million in 1990.
The World Bank’s multidimensional poverty index (MPI), which includes extreme poverty but excludes metrics such as nutrition and health deprivation, recorded a fall in non-monetary poverty from 53.8 per cent in 2005–06 to 15.5 per cent in 2022–23. The figure stood at 16.4 per cent in 2019–21.
India’s five most populous states — Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh — accounted for 54 per cent of the country’s extreme poor in 2022–23 and 51 per cent of its multidimensionally poor in 2019–21. These states contributed 65 per cent of the extreme poor in 2011–12 and were responsible for two-thirds of the overall decline, the report noted.
However, the Bank acknowledged that changes in methodology make comparisons over time challenging. “Changes in questionnaire design, survey implementation, and sampling in the 2022–23 survey represent improvements but present challenges for making comparisons over time. Moreover, sampling and data limitations suggest that consumption inequality may be underestimated,” the World Bank observed.
The poverty figures are based on the 2011–12 Consumption Expenditure Survey (CES) and the 2022–23 Household Consumption Expenditure Survey. The estimates may shift with revisions to global poverty thresholds and the adoption of updated PPPs from 2021. “Under a revised extreme poverty threshold of $3 per day and a lower-middle-income line of $4.20 per day, the 2022–23 poverty rates would be adjusted to 5.3 per cent and 23.9 per cent, respectively,” it said.
Despite the progress, questions around the robustness of data remain. “Data on consumption is not comparable any more since the methodology has changed. There has to be focus on collecting data from independent sources such as Census, National Family Health Survey. All these issues raise questions (on poverty decline),” said N C Saxena, former secretary of the Planning Commission.
The report also highlighted persisting wage disparities. In 2023–24, the median earnings of the top 10 per cent were 13 times higher than those of the bottom 10 per cent. India’s consumption-based Gini index improved slightly from 28.8 in 2011–12 to 25.5 in 2022–23. However, the World Bank cautioned that “inequality may still be underestimated due to data limitations”. The World Inequality Database pegged India’s income Gini coefficient at 62 in 2023, up from 52 in 2004.
Employment dynamics showed mixed trends. Youth unemployment was pegged at 13.3 per cent, climbing to 29 per cent among tertiary-educated graduates. Only 23 per cent of non-farm paid jobs are formal, while the majority of agricultural employment remains informal.
Self-employment is on the rise, particularly among rural workers and women. While the female labour force participation rate stands at 31 per cent, gender disparities persist, with 234 million more men in paid employment than women.
Nonetheless, the brief noted a silver lining in employment trends, observing that since 2021–22, job growth has outpaced the expansion of the working-age population.
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