Why in the News?

• India’s extreme poverty fell to 5.3% in 2022-23 from 27.1% in 2011-12, a much sharper decline than in previous decades, the World Bank said, releasing updated data..

What’s in Today’s Article?

• Global Poverty Thresholds (Introduction, India’s Progress Under Different Poverty Lines, Multidimensional Poverty Indicators, Consumption Trends and Economic Implications)

Introduction

• India has recorded a significant decline in extreme poverty over the past decade, according to the latest estimates by the World Bank using an updated threshold of $3 per day in 2021 PPP terms.
• The new estimates reflect India's resilience and progress in reducing poverty, even after adjusting for inflation and other macroeconomic changes.

Revised Global Poverty Thresholds

• In 2022-23, the World Bank raised the extreme poverty line from $2.15 per day to $3 per day (in 2021 PPP terms) to better reflect cost-of-living increases across developing nations.
• This adjustment shifts the global benchmark for poverty measurement, thereby increasing the comparability and relevance of data across time.
• At this $3/day level, the share of India’s population living in extreme poverty is estimated to be 5.3%, a steep fall from 27.1% in 2011-12.
• In absolute terms, the number of people living in extreme poverty has decreased from 344 million to just over 75 million in this period.

India's Progress under Different Poverty Lines

• At the $2.15/day line (previous international standard based on 2017 PPP), India's extreme poverty rate stood at 2.3% in 2022, compared to 16.2% in 2011-12.
• Under the lower-middle-income country (LMIC) poverty line, now revised to $4.20/day (up from $3.65/day), India's poverty rate fell from 57.7% to 23.9% in the same period.

• Interestingly, while the nominal poverty line has been raised, the new threshold of $4.20/day is effectively lower for India compared to an inflation-adjusted $4.40/day line, thus explaining the decline in poverty rate even under the revised standard.

Demographic and Educational Inequities in Poverty

• The World Bank’s data also highlight disparities based on geography and education:

• Rural Poverty: Dropped from 69% in 2011-12 to 32.5% in 2022-23 under the $3.65/day line.
• Urban Poverty: Declined from 43.5% to 17.2% in the same period.
• Educational Disparities: 35.1% of Indians aged 16+ with no formal schooling live below the poverty line, compared to just 14.9% among those with post-secondary education.

Multidimensional Poverty Indicators

• Apart from income-based poverty, India has also seen improvement in non-monetary dimensions of deprivation:

• World Bank’s MPI: India’s non-monetary poverty fell from 53.8% in 2005-06 to 15.5% in 2022-23.
• NITI Aayog Estimates: Show a reduction in multidimensional poverty from 29.17% in 2013-14 to 11.28% in 2022-23.
• Indicators used include access to clean drinking water, electricity, sanitation, and educational enrolment.

Consumption Trends and Economic Implications

• The decline in poverty is also supported by rising consumption levels:

• Rural Monthly Per Capita Expenditure (MPCE): Increased from ₹1,430 in 2011-12 to ₹2,079 in 2023-24 (at 2011-12 prices).
• Urban MPCE: Rose from ₹2,630 to ₹3,632 during the same period, reflecting an overall improvement in living standards.

• This consumption-driven growth supports the argument that India’s poverty reduction has been broad-based and sustained, aligning with macroeconomic recovery and welfare reforms.

Conclusion

• India’s progress in reducing poverty, even under the revised and more rigorous international benchmarks, underscores its achievements in economic development, social welfare, and infrastructure delivery.
• While challenges remain in addressing inter-group disparities and improving human capital, the data indicate a decisive shift toward a more inclusive growth model.
• The full data for 2023-24 will be released in October 2025 under the World Bank's Poverty and Inequality Platform (PIP), potentially offering more insights into India’s poverty trajectory in the post-pandemic era.