From Poverty to Progress: India’s Economic Strides Revealed by World Bank

MGMMTeam
Apr 25
3 min read

India has achieved a remarkable reduction in poverty over the past decade, according to the World Bank’s latest “Poverty & Equity Brief.” The report highlights that extreme poverty fell to just 2.3% in 2022–23, a sharp drop from 16.2% in 2011–12, effectively lifting 171 million people above the international poverty line of $2.15 per day. (Poverty & Equity Brief)

Broad-Based Poverty Reduction

Poverty as defined by the lower-middle-income line of $3.65 per day also saw a dramatic decline—from 61.8% to 28.1%. This translates to 378 million people escaping poverty, with improvements observed across both rural and urban regions. These developments reflect India’s progress as a lower-middle-income country.

The report further highlighted that while the five states of Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh accounted for 65% of India’s extreme poor in 2011–12, they were also responsible for two-thirds of the national decline. As of 2022–23, these states still represent 54% of the country’s extremely poor population.

Rural-Urban Gap Narrows

The urban-rural disparity in poverty rates has also narrowed significantly.

Rural extreme poverty dropped from 18.4% to 2.8%,
Urban poverty fell from 10.7% to 1.1%,
Shrinking the rural-urban gap from 7.7 percentage points to 1.7.

Under the broader $3.65 poverty line:

Rural poverty declined from 69% to 32.5%,
Urban poverty dropped from 43.5% to 17.2%. (First Post)

Employment Trends: Positive but Uneven

A key takeaway from the report is that employment growth has exceeded the expansion of India’s working-age population since 2021–22.

Urban unemployment fell to 6.6% in Q1 FY24/25, the lowest since 2017–18.
Female employment showed positive trends, especially in rural agriculture. However, gender disparities remain stark, with 234 million more men in paid employment compared to women. (CMIE)

Challenges persist, particularly in youth employment:

Youth unemployment stands at 13.3%,
Rising to 29% among college graduates.
Only 23% of non-farm paid jobs are formal, and informality still dominates in agriculture.
Self-employment is increasing, especially among rural women.

Multidimensional Poverty Sees Sharp Decline

India has also made progress in reducing multidimensional poverty, which measures deprivation beyond income—factoring in education, health, and access to basic services.

The Multidimensional Poverty Measure (MPM) fell to 15.5% in 2022–23, from 53.8% in 2005–06.

However, significant gaps remain:

29.9% of the population still lacks access to limited-standard sanitation,
13.8% of adults have not completed primary education,
11.2% lack improved drinking water,
1% lack electricity access.

Education also plays a crucial role, with poverty at 14.9% among those with tertiary education, versus 35.1% among those without formal education.

Inequality: Mixed Signals

While consumption inequality showed slight improvement (Gini index down from 28.8 to 25.5), income inequality remains high. According to the World Inequality Database, India’s income Gini index rose from 52 in 2004 to 62 in 2023. In 2023–24, the top 10% earned 13 times more than the bottom 10%.

Revised Poverty Lines May Shift Future Outlook

The World Bank cautions that future estimates might vary with updated poverty lines.

If the extreme poverty line is raised to $3.00/day, and
The lower-middle-income line to $4.20/day, India’s 2022–23 poverty rates would increase to 5.3% and 23.9%, respectively. (Business Today)

Conclusion

India’s significant strides in reducing poverty and improving employment reflect a decade of transformation, driven by economic growth and targeted policy interventions. The narrowing of the urban-rural divide, expansion of employment, and decline in multidimensional poverty are encouraging indicators. However, persistent challenges—especially in formal employment, gender disparity, and income inequality—underscore the need for sustained efforts in education, sanitation, and job creation. The World Bank emphasizes that while progress is undeniable, continued reforms are essential to ensure inclusive and lasting development.