India has recorded a sharp decline in poverty over the past decade, with the latest World Bank data showing a significant fall in the number of people living below the extreme poverty line. The improvement extends beyond income levels, with the country also reporting a decline in consumption inequality.
In its latest poverty update, the World Bank said, “Over the past decade, India has made remarkable progress in reducing poverty across both monetary and non-monetary dimensions, recording one of the fastest poverty declines in the world.”
Here are four key findings from the latest data that explain how India's poverty levels have changed and where challenges remain.
1. Extreme poverty falls sharply to 2.6%
The World Bank's latest figures show that India's extreme poverty rate dropped from 27.1 per cent in 2011 to 2.6 per cent in 2023.
The Bank measures poverty using three daily income thresholds based on 2021 purchasing power parity: $3, $4.2 and $8.3. These represent extreme poverty, lower-middle-income poverty and upper-middle-income poverty, respectively.
While poverty has declined sharply at the first two thresholds, the proportion of people living below the $8.3-a-day threshold remains considerably higher.
2. More than 75 million people remain extremely poor
Despite the decline in poverty rates, the number of people affected remains significant because of India's large population.
In 2023, India had 75.2 million people below the extreme poverty line, while 342.3 million fell below the $4.2-a-day threshold. At the $8.3-a-day level, the figure stood at 1.15 billion.
The World Bank also found that poverty at the lower-middle-income threshold was more than twice as likely in rural areas as in urban centres. People without formal education were three times more likely to be poor than those with tertiary education.
3. Poverty remains concentrated in rural India and certain states
The World Bank noted that rural households have experienced substantial improvements in living standards, narrowing the gap with urban areas. However, poverty continues to be concentrated in rural regions, where productivity and access to better-paying non-farm jobs remain limited.
It also found that states in a contiguous belt stretching from Uttar Pradesh to West Bengal account for about 57 per cent of India's poor population.
4. Consumption inequality has declined
India's consumption inequality has also fallen over the past decade. The Gini index, which measures inequality on a scale of 0 to 100, declined from 28.78 in 2011 to 23 in 2023.
However, the World Bank cautioned that household consumption surveys “may also not fully capture the consumption of wealthier households and are likely to understate inequality”. This remains an important limitation when interpreting the figures.