India's extreme poverty falls to 2.6% in 2023 from 27% in 2011; World Bank report flags unemployment

India's extreme poverty rate declined sharply to 2.6 per cent in 2023 from 27.1 per cent in 2011, while an estimated 496 million people moved above the lower middle-income poverty threshold during the period, according to a World Bank report released in October 2026.

The report, titled India Poverty and Equity Brief: October 2026, said the country had achieved one of the world's fastest reductions in poverty over the past decade, supported by rising consumption, increased employment and expanded social transfers, including food subsidies.

Between 2011 and 2023, the proportion of Indians living below the lower middle-income poverty line of $4.20 a day fell from 57.7 per cent to 16.1 per cent. Extreme poverty, measured at $3 a day, declined from 27.1 per cent to 2.6 per cent. Both thresholds are calculated using 2021 purchasing power parity (PPP).

𝗣𝗼𝘃𝗲𝗿𝘁𝘆 𝗽𝗿𝗼𝗷𝗲𝗰𝘁𝗲𝗱 𝘁𝗼 𝗱𝗲𝗰𝗹𝗶𝗻𝗲 𝗳𝘂𝗿𝘁𝗵𝗲𝗿

The World Bank projected that poverty would continue to decline, although at a slower pace than in the preceding decade. At the $4.20-a-day threshold, the poverty rate is expected to fall from 14.2 per cent in 2026 to 12.1 per cent by 2028.

The report clarified that these projections were indicative and based on microsimulation models. They would be updated as revised labour market and macroeconomic data or new household survey findings became available.

The estimates for the previous decade were drawn from three official household surveys: the 2011-12 Consumer Expenditure Survey and the Household Consumption Expenditure Surveys of 2022-23 and 2023-24. The calculations used welfare aggregates based on the Modified Mixed Reference Period methodology, adjusted for spatial and temporal price differences.

𝗦𝗶𝘁𝗵𝗮𝗿𝗮𝗺𝗮𝗻 𝗰𝗿𝗲𝗱𝗶𝘁𝘀 𝗴𝗼𝘃𝘁 𝗽𝗼𝗹𝗶𝗰𝗶𝗲𝘀

Reacting to the findings, Finance Minister Nirmala Sitharaman said the World Bank had identified strong consumption growth, rising employment, particularly among women, and expanded social transfers as major factors behind the reduction in poverty.

In a post on X, Sitharaman said sustained policy efforts under Prime Minister Narendra Modi were delivering tangible results and strengthening the foundations for inclusive growth and greater economic opportunity.

She linked the progress to public confidence in the government, saying the National Democratic Alliance continued to receive the trust and electoral mandate of citizens.

The Finance Minister reiterated the government's commitment to building on the gains through productive employment, stronger household incomes and more effective delivery of public services.

𝗠𝘂𝗹𝘁𝗶𝗱𝗶𝗺𝗲𝗻𝘀𝗶𝗼𝗻𝗮𝗹 𝗽𝗼𝘃𝗲𝗿𝘁𝘆 𝗮𝗹𝘀𝗼 𝗳𝗮𝗹𝗹𝘀

Beyond income and consumption, India recorded substantial improvements in non-monetary measures of deprivation.

According to the Oxford Poverty and Human Development Initiative's Multidimensional Poverty Index (MPI), the share of people experiencing multidimensional poverty fell from 53.8 per cent in 2005-06 to 16.4 per cent in 2019-21.

The World Bank's own MPI measure placed multidimensional poverty at 15.5 per cent in 2022-23.

These measures capture deprivations across several aspects of living standards rather than relying solely on monetary thresholds.

The report attributed the broader improvement to consumption growth, rising employment and expanded social protection. However, it observed that households remaining in poverty increasingly faced overlapping disadvantages, including lower educational attainment, limited assets, unstable employment and higher dependency ratios.

𝗥𝘂𝗿𝗮𝗹 𝗴𝗮𝗶𝗻𝘀 𝗻𝗮𝗿𝗿𝗼𝘄 𝘂𝗿𝗯𝗮𝗻-𝗿𝘂𝗿𝗮𝗹 𝗴𝗮𝗽

The World Bank said households in both rural and urban India had experienced substantial welfare improvements, with faster poverty reduction in rural areas narrowing the gap between the two.

Nevertheless, a large share of India's remaining poor population continued to live in villages, where productivity was generally lower and access to better-quality non-farm employment remained limited.

The report also highlighted increasing geographical concentration of poverty. Despite improvements across most states, approximately 57 per cent of India's poor population lived in a contiguous belt stretching from Uttar Pradesh to West Bengal.

It said future reductions in national poverty would increasingly depend on creating productive employment opportunities in these states, where structural disadvantages continued to restrict household incomes.

𝗘𝗺𝗽𝗹𝗼𝘆𝗺𝗲𝗻𝘁 𝗿𝗶𝘀𝗲𝘀, 𝗯𝘂𝘁 𝘄𝗮𝗴𝗲 𝗴𝗮𝗽 𝗽𝗲𝗿𝘀𝗶𝘀𝘁𝘀

The report said employment increased by approximately 134 million people between 2017 and 2023, nearly twice the growth in the working-age population.

Much of the expansion was driven by rural women entering paid employment, increasing the number of earners within households and contributing to improved family incomes.

However, the World Bank cautioned that employment growth had been concentrated in relatively low-productivity activities, while real earnings remained broadly unchanged.

Wage disparities also continued to be pronounced. In 2023, median earnings among the highest-paid 10 per cent of workers were approximately 13 times those of the lowest-paid 10 per cent.

The findings indicated that employment expansion had supported poverty reduction but had not necessarily translated into equally strong improvements in wages or job quality.

𝗬𝗼𝘂𝘁𝗵 𝘂𝗻𝗲𝗺𝗽𝗹𝗼𝘆𝗺𝗲𝗻𝘁 𝗿𝗶𝘀𝗲𝘀 𝘁𝗼 𝟭𝟱.𝟵%

The report found that overall labour market conditions remained broadly resilient, with labour force participation and employment rates largely stable between the first quarters of FY2026 and FY2027.

However, youth unemployment increased from 14.6 per cent to 15.9 per cent during the same period, with the rise particularly pronounced among young women in rural areas.

The World Bank noted that relatively stagnant real earnings and the concentration of new employment in lower-productivity sectors remained important challenges.

It emphasised that sustaining poverty reduction would require stronger household incomes and better employment opportunities, particularly for people with limited education, few productive assets and restricted access to stable work.

The findings suggest that while India has achieved substantial progress in reducing deprivation, the next phase of poverty reduction will depend increasingly on improving the quality of employment, addressing regional disparities and ensuring that economic growth translates into higher earnings for vulnerable households.