India’s Extreme Poverty Rate Plummets: World Bank Data Reveals Dramatic Progress
India has recorded a remarkable reduction in extreme poverty over the past decade, according to the latest World Bank data. The extreme poverty rate in the country fell from 27.1% in 2011-12 to just 5.3% in 2022-23, even as the World Bank raised its international poverty threshold to $3 per person per day. This shift means that millions more people are now considered above the extreme poverty line, reflecting significant progress in improving living standards across the nation.
The World Bank’s updated methodology, which adjusts for inflation and cost of living, provides a more accurate picture of poverty worldwide. For India, this means that the threshold for extreme poverty is now 15% higher than the previous $2.15 per day standard, making the achievement even more notable.
How Many People Have Escaped Extreme Poverty?
Between 2011-12 and 2022-23, India lifted approximately 171 million people out of extreme poverty, according to the World Bank’s ‘Poverty & Equity Brief.’ The number of people living in extreme poverty dropped from 344 million to just over 75 million during this period. This progress is even more significant when considering the country’s large and growing population.
At the $3 per day threshold, the World Bank estimates that about 54.7 million people in India were living in extreme poverty in 2024, representing a poverty rate of 5.44%. The decline is even sharper when using the older $2.15 per day line, with the rate falling from 16.2% in 2011-12 to 2.3% in 2022-23.
Rural and Urban Poverty: The Gap Narrows
The reduction in poverty has been observed in both rural and urban areas. Rural extreme poverty dropped from 18.4% to 2.8%, while urban extreme poverty fell from 10.7% to 1.1%. This narrowing of the rural-urban poverty gap—from 7.7 to 1.7 percentage points—highlights the broad-based nature of India’s progress.
Five of India’s most populous states account for 54% of the country’s extremely poor, indicating that targeted interventions in these regions could further accelerate poverty reduction.
What Drove India’s Success in Reducing Poverty?
Experts and the World Bank attribute India’s success to a combination of robust economic growth and targeted government interventions. One of the most impactful measures has been the expansion of free and subsidised food transfers, which provided a crucial safety net for millions, especially during the COVID-19 pandemic and periods of economic uncertainty.
Improvements in the quality and scope of household surveys have also given policymakers better tools to identify and address poverty. The narrowing rural-urban gap suggests that rural development programs and infrastructure investments have played a key role.
Understanding the New Poverty Lines
The World Bank periodically updates its international poverty lines to reflect changes in prices and living costs. In June 2024, the threshold for extreme poverty in low-income countries was raised from $2.15 to $3 per day. For lower-middle-income countries like India, the line increased from $3.65 to $4.20 per day. These adjustments ensure that poverty statistics remain relevant and meaningful as economies evolve.
Comparing India and Its Neighbors: A Stark Contrast
While India has made significant strides, neighboring countries face greater challenges. For example, the World Bank reports that nearly 45% of Pakistan’s population lives in poverty, with 16.5% classified as living in extreme poverty. Pakistan’s poverty rate remains stubbornly high at 42.4%, and economic growth of 2.6% is considered insufficient to reduce poverty. The country is expected to see an additional 1.9 million people fall into poverty in 2024-25, driven by population growth and challenges in the agriculture sector.
In contrast, India’s poverty reduction has been supported by higher economic growth rates and more effective social safety nets.
Challenges and the Road Ahead
Despite the progress, challenges remain. The World Bank cautions that a significant proportion of India’s population remains vulnerable to slipping back into poverty due to economic shocks, health crises, or “accidents of life.” The five most populous states still account for more than half of the extremely poor, and chronic poverty persists in some regions.
India’s real GDP is still about 5% below pre-pandemic trends, and global uncertainties—such as trade tensions and shifting economic policies—pose risks to continued progress. However, the country’s current account deficit is expected to remain manageable, and foreign exchange reserves are projected to stay stable.
In Summary
- India’s extreme poverty rate fell from 27.1% in 2011-12 to 5.3% in 2022-23, according to the World Bank.
- 171 million people were lifted out of extreme poverty over the past decade.
- The World Bank raised the extreme poverty threshold to $3 per day, making the achievement more significant.
- Government interventions, especially free and subsidised food transfers, played a key role in reducing poverty.
- The rural-urban poverty gap has narrowed considerably.
- India’s progress contrasts sharply with neighboring Pakistan, where poverty rates remain high.
- Challenges remain, with many still vulnerable to falling back into poverty, but the outlook is cautiously optimistic.
