Munish Gupta
NEW DELHI: IN one of the most remarkable achievements of the past decade, India has lifted 171 million people out of extreme poverty. The World Bank acknowledges India’s decisive fight against poverty in its ‘Spring 2025 Poverty and Equity Brief’.
According to the report, the proportion of people living on less than $2.15 a day, which is the international benchmark for extreme poverty, fell sharply from 16.2 per cent in 2011-12 to just 2.3 per cent in 2022-23.
This achievement is testament to the Government’s commitment to inclusive development, focusing on both rural and urban areas. Through targeted welfare schemes, economic reforms, and increased access to essential services, India has made substantial strides in reducing poverty levels.
The World Bank’s report highlights how these efforts have significantly impacted the lives of millions, narrowing the poverty gap across the country.
Overview of PEBs
The Poverty and Equity Briefs (PEBs) from the World Bank highlight trends in poverty, shared prosperity, and inequality for over 100 developing countries. Published twice a year for the Spring and Annual Meetings of the World Bank Group and the International Monetary Fund, these briefs offer a snapshot of a country’s poverty and inequality context, ensuring poverty reduction remains a global priority. Each PEB includes a two-page summary that presents recent developments in poverty reduction, along with updated data on key development indicators.
These indicators cover various aspects of poverty, including rates of poverty and the total number of poor, using both national poverty lines and international benchmarks ($2.15 for extreme poverty, $3.65 for lowermiddle-income, and $6.85 for upper-middle-income). The briefs also include comparative trends in poverty and inequality over time and across countries, a multidimensional poverty measure that accounts for non-monetary deprivations like education and basic services, and inequality measurements using the Gini Index.
Sharp reduction
The World Bank’s Poverty and Equity Brief for India finds that the sharp reduction in extreme poverty has been broad-based, covering both rural and urban areas. In rural areas, extreme poverty fell from 18.4 per cent in 2011-12 to 2.8 per cent in 2022-23. In urban centres, extreme poverty reduced from 10.7 per cent to 1.1 per cent over the same period. The gap between rural and urban poverty shrunk from 7.7 percentage points to 1.7 percentage points, with an annual decline rate of 16 per cent between 2011-12 and 2022-23.
The World Bank finds that India has made strong gains in reducing poverty at the lower-middle-income level, measured at $3.65 per day. Millions have benefited from this broad-based growth across both rural and urban areas.
States’ key role
India’s poverty rate at the 3.65 dollars per day line fell from 61.8 per cent in 2011- 12 to 28.1 per cent in 2022-23, lifting 378 million people out of poverty.
Rural poverty declined from 69 per cent to 32.5 per cent, while urban poverty dropped from 43.5 per cent to 17.2 per cent.
The rural-urban poverty gap narrowed from 25 to 15 percentage points, with a 7 per cent annual decline between 2011-12 and 2022-23.
The report notes that significant progress has been made in reducing extreme poverty across India, with key states playing a vital role in both the decline of poverty and the advancement of inclusive development. The five most populous states – Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh – represented 65 per cent of India’s extreme poor in 2011-12. By 2022-23, these states contributed to two-thirds of the overall decline in extreme poverty.
Multidimensional poverty
As per World Bank’s report, India has made significant strides in reducing nonmonetary poverty, and future poverty estimates are expected to change based on updated global standards.
Non-monetary poverty, as measured by the Multidimensional Poverty Index (MPI), which considers factors like education, health, and living conditions, declined from 53.8 per cent in 2005-06 to 16.4 per cent by 2019-21. The World Bank’s Multidimensional Poverty Measure stood at 15.5 per cent in 2022-23, reflecting ongoing improvements in living conditions. With revised international poverty lines (the minimum income needed to meet basic needs) and the adoption of 2021 Purchasing Power Parities (PPPs) (which adjust for differences in living costs between countries), the new poverty rates for 2022-23 are expected to be 5.3 per cent for extreme poverty and 23.9 per cent for lower-middle-income poverty.
India’s consumption-based Gini index improved from 28.8 in 2011-12 to 25.5 in 2022-23, indicating a reduction in income inequality.
Employment growth
India has witnessed positive trends in employment growth, particularly since 2021- 22, with significant improvements in both rural and urban areas, as highlighted in the World Bank’s report. Employment growth has outpaced the working-age population since 2021-22, with rising employment rates, especially among women.
Urban unemployment fell to 6.6 per cent in Q1 FY24/25, the lowest since 2017-18. Recent data indicates a shift of male workers from rural to urban areas for the first time since 2018-19, while rural female employment in agriculture has grown.
