India has made huge progress in fighting poverty. Between 2011-2012 and 2022-2023, around 171 million people in the country moved out of extreme poverty, according to the World Bank’s latest Poverty and Equity Brief.
Earlier, people were considered extremely poor if they earned less than $2.15 a day. But the World Bank has now raised that bar to $3 per day, making it harder to count fewer people as poor. Yet, India’s extreme poverty rate still dropped, from 27.1 per cent to just 5.3 per cent under the new line. Under the old standard, it went from 16.2 per cent to just 2.3 per cent, meaning the number of extremely poor people fell from 205.9 million to 33.7 million.
The gap between rural and urban poverty also shrank. In rural areas, poverty fell from 18.4 per cent to 2.8 per cent, and in urban areas, from 10.7 per cent to 1.1 per cent, reducing the gap between the two from 7.7 percentage points to 1.7. That’s a 16 per cent drop every year.
If we use the $3.65 per day poverty line (used for lower-middle-income countries), India’s poverty dropped from 61.8 per cent to 28.1 per cent, helping 378 million people. Rural poverty under this line fell from 69 per cent to 32.5 per cent, and urban poverty from 43.5 per cent to 17.2 per cent. The rural-urban gap came down from 25 to 15 percentage points, falling at 7 per cent per year.
Five of India’s biggest states, Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh, had 65 per cent of the poor population in 2011-12. These states also saw nearly two-thirds of the total poverty reduction by 2022-23.
Poverty is not just about money. It also includes things like access to education, health, and housing. According to the Multidimensional Poverty Index (MPI), non-monetary poverty in India fell from 53.8 per cent in 2005-06 to 16.4 per cent in 2019-21, and now stands at 15.5 per cent in 2022-23, showing that life has improved for millions in many ways.
(World Bank’s Report can be accessed here)
The decline is real and not statistical
Some of the tale is hidden in improved and superior data. Post 2017-18, India has been conducting household consumption surveys with the Modified Mixed Recall Period (MMRP). Under this method, recall periods are aligned according to consumption behaviour for items frequently consumed such as vegetables, shorter recall is done, whereas longer recall is for durable goods. This strategy provides more precise consumption data. The outcome was a significant increase in reported domestic consumption, generating increased living standard estimates even once the poverty line increased.
A report by the State Bank of India estimated that India’s poverty rate could have declined even more to 4.6 per cent in 2024 after accounting for more recent data and definitions.
Transparency and integrity of data thus form the bedrock of India’s achievement. According to the World Bank chief, India was a statistical exception in a good sense. Policies Behind the Progress: How India Fought Poverty Through Reform, Growth, and Inclusion
The phenomenal reduction in poverty all over India in the past decade did not occur accidentally or in a vacuum. It was the result of an intelligently meshed series of factors: revolutionary changes in methodology for data collection, sustained economic growth, directed delivery of welfare, inclusion of the poor in the financial system, and local innovations. All these drivers combined to alter the economic fortunes of several hundred million.
Methodology and data reform
Perhaps the most significant change in measuring poverty in India occurred with the introduction of the Modified Mixed Recall Period (MMRP) in Household Consumption Expenditure Surveys. The Uniform Recall Period (URP), where households were asked to report consumption over the last 30 days on all goods, had previously been the norm. The MMRP added some sophistication to the process, purchase of frequently bought goods such as food was monitored for seven days, and durables were measured over a more extended timeframe of up to one year.
This revision, introduced in the 2022-23 Household Consumption Expenditure Survey, aligned India with international norms and provided a more realistic representation of household consumption. The result was dramatic: average monthly per capita consumption almost doubled from Rs 1,501 in 2011-12 to Rs 2,940 in 2022-23 in rural India, and from Rs 2,630 to Rs 6,459 in urban India. On this elevated consumption base, the poverty rate plummeted under the redesigned benchmarks.
More significantly, the revision didn’t skew the truth of progress, it sharpened it. When the World Bank revised its international poverty line from $2.15 to $3 per day (in terms of 2021 PPP), people worried that India’s achievement would be downgraded. The opposite, however, happened. India’s headcount of poverty still declined dramatically, implying actual improvements on the ground.
The Press Information Bureau and others pointed out that India’s statistical revision improved by cutting down worldwide poverty figures by more than 125 million is a proof of the revolutionary effect of enhanced data practices.
Urbanisation redistributes opportunities
India’s sustained economic growth over the past decade provided the financial backbone for poverty alleviation. Averaging between 6 to 7 percent in real GDP growth annually, the economy expanded in sectors that particularly benefited the poor, including manufacturing, services, construction, and retail. This growth translated into more jobs, higher wages, and greater mobility.
Urbanisation was an important driver of the redistribution of opportunities. With growing cities and increasing numbers of infrastructure projects, millions moved from villages in pursuit of employment. The World Bank’s analysis found that this shift to the cities was the direct cause of increased incomes for the lowest deciles of income. People who moved to cities not only gained employment but also were provided with access to public services and facilities that enhanced their quality of life.
The growth narrative was also inclusive to a certain degree. Although inequality has been an issue, consumption-based inequality has fallen modestly. The Gini index, a major yardstick of inequality, fell from 28.8 for the period 2011-12 to 25.5 in 2022-23 in terms of consumption. It does require mentioning that income-based inequality, as measured by other databases like that of the World Inequality Report, did go up in tandem, showing that though poverty has decreased, income gaps are still broad.
Welfare programmes leading the change
India’s welfare framework has been ambitious and innovative, most notably in the manner in which it reacted to crises such as COVID-19.
One of the most effective programmes was the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY). Introduced in March 2020, this scheme provided an extra 5 kilograms of rice or wheat per person per month, free of charge, to more than 813 million beneficiaries under the National Food Security Act. The scheme operated in several phases of the pandemic and was extended several times.
PMGKAY was not only about food security; it was a lifeline. It prevented millions of families from relapsing into poverty from unexpected income losses during lockdowns. A study by the International Monetary Fund (IMF) estimated that India was among the handful of countries where poverty did not increase during the pandemic, and that was because of this programme.
Another pillar scheme was the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Laid out much prior to that in 2005, it became even more critical to revisit during and after COVID. MGNREGA assured employment for up to 100 days of paid work in rural regions. During FY 2020–21, more than 11 crore individuals were offered employment through the scheme. Significantly, workers received their wages directly deposited in bank accounts through the Direct Benefit Transfer system, making it transparent and preventing leakages.
MGNREGA also had long-term developmental impacts. Most of the activities undertaken ponds, roads, and sanitation units created rural assets that improved agricultural productivity and village conditions.
Every penny from Govt reaches on ground as it is
India’s financial inclusion revolution was facilitated by a trinity of policies: the Aadhaar biometric identity programme, the Jan Dhan bank account programme, and mobile phone connectivity. The Pradhan Mantri Jan Dhan Yojana (PMJDY) initiative that was initiated in 2014 focused on integrating all Indian households in the banking system. Over 55 crore accounts have now been opened, the majority with zero balance obligations and direct association with benefit schemes.
This facilitated the successful implementation of Direct Benefit Transfers (DBT), whereby subsidies for LPG, fertilisers, pensions, and scholarships were credited directly into beneficiaries’ accounts. The DBT system saved more than Rs 2.7 lakh crore through the elimination of fraud, duplicate payments, and middlemen.
Accompanying this were flagship programmes such as:
1) Pradhan Mantri Ujjwala Yojana: Distributed over 9 crore LPG connections to women belonging to below poverty line families, decreasing dependency on toxic biomass fuels.
2) Pradhan Mantri Awas Yojana: Benefited more than 3 crore rural and urban families to construct pucca houses with water and sanitation facilities.
3) Ayushman Bharat-PMJAY: Provided health insurance coverage of up to Rs 5 lakh per family per year to more than 50 crore Indians.
These interventions combined enhanced quality of life, improved health outcomes, and financial stability, poverty less likely to repeat itself.
State-level success stories
While the central schemes built the foundation, states led most of the ground-level success in poverty alleviation. Uttar Pradesh, Bihar, Madhya Pradesh, Odisha, and Rajasthan were the standout states among the five. They accounted for almost two-thirds of the decline in extreme poverty since 2011–12.
The most populous state, Uttar Pradesh, initiated the Zero Poverty Campaign, which merged central schemes with local inventions. Utilising data to spot vulnerable households and guarantee delivery of employment, food, pensions, and shelter, the campaign is said to have lifted thousands of people out of extreme poverty.
Odisha enhanced the public distribution system and operated health insurance and rural employment programs successfully. Bihar invested in sanitation infrastructure and education, while Madhya Pradesh rationalised rural job demand and wage payment systems under MGNREGA. Rajasthan progressed women’s empowerment through self-help groups and maternity benefits.
Such state-driven innovations prove that with focused governance and community participation, poverty elimination is a feasible aim even in the poorest of areas.
Challenges to be addressed
Even with the impressive achievements, daunting challenges persist. As of 2022-23, at least 75 million people, 5.3 per cent of the country’s population remain below the $3 a day mark. They are mostly in rural, tribal, or marginal communities with poor access to education, medical care, and sanitation.
While India has registered a dramatic reduction in multidimensional poverty, the MPI has fallen from 53.8 per cent in 2005-06 to 16.4 per cent in 2019-21 and then to 15.5 per cent in 2022-23. This indicates improvement but also highlights continuing non-income deprivations.
Inequality of income remains concerning. Indians with the highest 1 per cent of earnings own over 40 per cent of the country’s wealth, while 99 per cent of Indians have incomes of less than $20 a day. India’s labour market is still in the informal sector, with more than 90 per cent of workers engaged with no job security and no benefits.
Exogenous risks due to inflation, climate-related dislocations and world economic slowdowns may jeopardise the gains. The World Bank predicts growth in India to fall back to trend only in 2027-28, although a lot hinges on world uncertainty. On the ground, this implies initiatives such as food assistance, employment, access to healthcare and education need to remain solid.
A tale of two neighbours
India’s success is more defined in comparison to Pakistan. Pakistan’s rate of extreme poverty grew from 4.9 per cent in the years 2017-2021 to 16.5 per cent. India lifted more individuals out of extreme poverty than the total population of Pakistan.
Whereas India progressed with a combination of correct data, broad policies and economic growth, Pakistan witnessed the opposite, an indication that good governance and special schemes play a significant role in whether poverty is decreasing or increasing.
The bottom line
India has authored a milestone in its development history by pulling 269 million individuals out of abject poverty, even as the world set the poverty bar higher. It was not an accident. It occurred because good data, careful planning, and universal delivery systems functioned at scale. It occurred because rural Indian families in millions were empowered with the ability to live better and more securely.
The commitment now is to make this foundation deeper. Survival has to be turned into flourishing. That will require dedication, priority and creativity. But the achievement so far illustrates that with the right systems and purpose, even the toughest hurdles can be cleared.
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