India brings 496 mn out of poverty in 12 years, extreme poverty crashes to 2.6%: World Bank

The fall is even more noticeable when measured against the $4.20-a-day poverty line, which the World Bank uses for lower-middle-income countries. The share of India's population living below this level dropped from 57.7% in 2011 to 16.1% in 2023. This means around 496 million people moved out of poverty during the period. While the numbers point to major progress, the World Bank says the challenge ahead is different.

Poverty is now increasingly concentrated in a few states, particularly across the belt from Uttar Pradesh to West Bengal. Further reducing poverty will depend on creating more productive jobs and improving earnings in these regions. What helped India reduce poverty? The World Bank has linked the decline in poverty to three main factors: higher household consumption, an increase in employment, particularly among women, and wider access to government welfare schemes, including food subsidies.

The rise in employment has played an important role. India added around 134 million jobs between 2017 and 2023, almost twice the increase in its working-age population, the report said. A large part of this growth came from rural women joining paid work. This increased the number of earning members in many households and helped improve their financial position. India has also made progress in reducing poverty beyond income levels.

The Oxford Poverty and Human Development Initiative's multidimensional poverty index shows that poverty fell from 53.8% in 2005-06 to 16.4% in 2019-21. The World Bank's own multidimensional poverty measure puts the figure at 15.5% in 2022-23. This measure looks beyond income and considers people's access to basic services and living conditions. Rural India improves, but poverty remains higher The report points to a clear improvement in rural areas, which have seen poverty decline faster than urban India over the years.

This has helped reduce the gap between rural and urban poverty. However, rural India continues to account for a much larger share of the country's poor. At the $4.20-a-day poverty line, 19.3% of people in rural areas were poor in 2023, compared with 8.6% in urban areas. The World Bank has also highlighted the concentration of poverty across certain parts of the country. Around 57% of India's poor live in a continuous belt stretching from Uttar Pradesh to West Bengal.

This means that future efforts to bring down poverty will largely depend on what happens in these states. The report points to the need for more productive employment opportunities, particularly in regions where poverty remains widespread. Education makes a significant difference. Around 21.3% of adults with no formal schooling were poor at the $4.20-a-day level. The figure was much lower, at 7.4%, among people with tertiary education.

Children are also among the most affected groups. Those aged between 0 and 14 had the highest poverty rate across all age groups, at 21.8%. Access to basic services remains another concern. Around 29.6% of India's population did not have access to limited-standard sanitation. Meanwhile, 13.8% lived in households where no adult had completed primary education. More jobs, but income growth remains a concern Despite the rise in employment, the World Bank has flagged concerns about the quality of jobs and the pace of income growth.

Labour force participation and employment rates remained stable between the first quarters of FY2026 and FY2027. However, youth unemployment increased from 14.6% to 15.9% during the same period. Young women in rural areas were among the worst affected by the rise in unemployment. The report also points out that real earnings remained largely unchanged, while much of the employment growth came from low-productivity activities.

This suggests that although more people are finding work, their jobs are not necessarily helping them earn significantly more. Poverty likely to fall further, but at a slower pace The World Bank expects poverty to continue declining over the next few years, although the pace of improvement is likely to slow. Its projections, based on a microsimulation model, show that the share of India's population living below the $4.20-a-day poverty line could fall from 14.2% in 2026 to 12.1% by 2028.

Note: The World Bank cautioned that India's poverty estimates may have some limitations. While the surveys show a sharp improvement, part of the change could be due to differences in how consumption was measured. The surveys may also undercount wealthier households, understating income inequality. Further, their rural and urban population estimates are based on the 2011 Census, which could overstate the rural population and understate the urban share.