India has made remarkable progress in poverty reduction, lifting 171 million people out of extreme poverty between 2011-12 and 2022-23, according to the World Bank’s latest 'Poverty & Equity Brief' on India. The report reveals that extreme poverty, defined as living on less than USD 2.15 per day, decreased from 16.2% in 2011-12 to just 2.3% by 2022-23. This reduction signifies the country’s success in addressing its most pressing poverty challenges.
The reduction in extreme poverty was particularly noticeable in rural areas, where the percentage of people living in extreme poverty fell from 18.4% to 2.8%. Urban areas also saw a significant decrease, with the figure dropping from 10.7% to 1.1%. As a result, the rural-urban poverty gap narrowed from 7.7 percentage points in 2011-12 to 1.7 percentage points in 2022-23. The annual decline in rural poverty rates stood at an impressive 16%, highlighting the success of poverty alleviation efforts.
Moreover, India has transitioned into the lower-middle-income category, with poverty falling from 61.8% to 28.1% using the USD 3.65 per day lower-middle-income poverty line. This shift helped lift 378 million people out of poverty. The reduction in rural poverty was especially notable, with the percentage decreasing from 69% to 32.5%. In urban areas, poverty fell from 43.5% to 17.2%. The gap between rural and urban poverty also narrowed, from 25 percentage points to 15, with a 7% annual reduction.
India's largest and most populous states, namely Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh, were pivotal in driving these reductions. These states accounted for 65% of the country’s extreme poor in 2011-12, and by 2022-23, they contributed to two-thirds of the decline in extreme poverty. However, these states still accounted for a significant proportion of India’s poor, with 54% of the extreme poor and 51% of the multidimensionally poor residing there in 2022-23.
The report also noted that non-monetary poverty, as measured by the multidimensional poverty index (MPI), fell from 53.8% in 2005-06 to 16.4% by 2019-21, underscoring improvements in access to education, health, and living standards. Employment growth has outpaced the working-age population since 2021-22, with employment rates, particularly among women, showing positive trends. Urban unemployment dropped to 6.6% in the first quarter of FY24/25, the lowest level since 2017-18.
Despite these achievements, challenges persist. Youth unemployment remains high at 13.3%, and it rises sharply to 29% among tertiary education graduates. The formal sector remains limited, with only 23% of non-farm paid jobs classified as formal. The majority of agricultural employment remains informal. Furthermore, while self-employment is on the rise, especially in rural areas and among women, gender disparities persist. The employment rate for women stands at 31%, and there are still 234 million more men in paid work.
The World Bank’s Poverty and Equity Briefs provide key insights into poverty, inequality, and shared prosperity trends across over 100 developing countries. These briefs are released biannually, helping policymakers and global institutions monitor progress and challenges in the fight against poverty. India’s recent advancements in poverty reduction are encouraging, but they also highlight the need for continued efforts to address employment challenges and gender inequality.
