Poverty rate in India fell to 2.6%: World Bank report

India’s extreme poverty rate dropped sharply to 2.6 per cent in 2023 from 27.1 per cent in 2011, with the country lifting an estimated 496 million people out of poverty, a World Bank report said.

The World Bank’s report titled ‘India Poverty and Equity Brief: October 2026’ said the poverty estimates are based on the lower middle-income country threshold of $4.20 per day and the extreme poverty threshold of $3 per day, measured at 2021 purchasing power parity (PPP).

Over the past decade, India has made remarkable progress in reducing poverty across both monetary and non-monetary dimensions, recording “one of the fastest poverty declines” in the world, it said.

“Between 2011 and 2023, the share of the population living below the Lower Middle-Income Country line ($4.20/day, 2021 PPP) fell from 57.7 per cent to 16.1 per cent, lifting an estimated 496 million people out of poverty, while extreme poverty ($3/day) declined from 27.1 per cent to 2.6 per cent,” it said.

The report further said that poverty is projected to continue declining, albeit more gradually, with the poverty rate at the $4.20/day line expected to fall from 14.2 per cent in 2026 to 12.1 per cent by 2028.

These indicative microsimulation-based projections will be updated as labour market and macroeconomic data are revised, or new data becomes available.

In a post on X, Finance Minister Nirmala Sitharaman said the World Bank identifies strong consumption growth, rising employment, especially among women, and expanded social transfers, including food subsidies, as major drivers.

She said that under the leadership of Prime Minister Narendra Modi, the government’s sustained policy efforts are yielding tangible results, strengthening the foundations for inclusive growth and greater economic opportunity.

“This is the reason why the NDA Government wins people’s trust and the mandate of our citizens. We remain committed to building on this progress through productive employment, stronger household incomes and effective delivery of public services, so that aspirations of our people are met,” Sitharaman said.

On the non-monetary dimensions, as measured by the Oxford Poverty and Human Development Initiative (OPHI) Multidimensional Poverty Index (MPI), poverty fell sharply from 53.8 per cent in 2005-06 to 16.4 per cent in 2019-21, with the World Bank MPI measure at 15.5 per cent in 2022-23.

“This progress was mainly driven by strong consumption growth, rising employment, especially among women, and expanded social transfers, including food subsidies,” it said.

As poverty declined, it became increasingly concentrated among households with lower education, fewer assets, limited access to stable employment, and higher dependency ratios, the report said.

Wage disparities, however, remain pronounced, as median earnings among the top 10 per cent of workers were about 13 times those of the bottom 10 per cent in 2023, it added.

Spatially, the report said India’s poverty reduction story is one of both convergence and concentration. Households in both rural and urban areas experienced substantial welfare gains, with faster progress in rural India significantly narrowing the rural-urban gap.

“Yet many of the households that remain poor continue to live in rural areas, where productivity is lower and access to higher-quality non-farm employment opportunities remains more limited,” it said, adding that poverty has also become increasingly concentrated geographically.

While living standards improved across most states, households in a contiguous belt stretching from Uttar Pradesh to West Bengal account for about 57 per cent of India’s poor population.

As a result, further reductions in national poverty will increasingly depend on enabling productive employment in these States, the report said.

“Over the recent period, between 2017 and 2023, employment increased by about 134 million people, nearly twice the growth of the working-age population, with much of the gain driven by rural women entering paid work and raising the number of earners per household,” the report said.

Labour market conditions continue to be broadly resilient, with labour force participation and employment rates stable between Q1 FY2026 and Q1 FY2027.

“However, youth unemployment rose from 14.6 to 15.9 per cent between the two quarters, particularly among rural young women. Moreover, real earnings remained broadly unchanged with employment growth concentrated in relatively low-productivity activities,” it said.

The report said poverty estimates over the past decade are based on three official household surveys: the 2011-12 CES and the 2022-23 and 2023-24 HCES, and are measured using welfare aggregates from the MMRP design and deflated spatially and temporally.