India is often hailed as a growth success story but has its economic progress truly lifted millions out of poverty? The World Bank believes the answer is yes. In a recent report, it noted that India has seen real improvements not only in reducing income-based poverty, but also in enhancing health, education, and living standards overall. However, despite this progress, a more complex reality persists, particularly in rural regions.
Outstanding decline in extreme poverty rate
India has made remarkable progress in tackling poverty over the past decade. The percentage of people living in extreme poverty, that is on less than US$2.15 a day, fell dramatically from 16.2% in 2011-12 to just 2.3% in 2022-23. This means that around 171 million people are no longer trapped in the harshest level of poverty.
Rural areas have seen particularly strong gains in extreme poverty with levels in the countryside having dropped from 18.4% to 2.8%, while urban areas saw a decline from 10.7% to 1.1%. The gap between rural and urban poverty levels has also narrowed significantly from 7.7% to 1.7%.
India shifts to lower-middle-income category
According to the World Bank classification, India has moved into the lower-middle-income category, the poverty line for which is US$3.65 per day. Despite this increase, poverty levels still managed to decline from 61.8% in 2011-2012 to 28.1% in 2022-2023, impacting over 378 million people.
Rural regions saw the poverty rate decreasing by almost half from 69% down to 32.5%. Urban areas saw a similar trend, with poverty levels falling from 43.5% to 17.2%. This helped to narrow the rural-urban poverty gap within this broader measure from 25% to 15%.
Five key states
A large percentage of India’s progress was made in five key states – Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh. In 2011-12, these regions accounted for 65% of those living in extreme poverty nationwide. By 2022-23, these same states were responsible for roughly two-thirds of the reduction in extreme poverty across the country.
However, challenges persist and according to the most recent data, these states remain home to 54% of India’s extremely poor population and 51% of those facing multidimensional poverty.
Source: World Bank
Distressing rural reality
While the national figures show steady gains, the situation on the ground, particularly in rural areas, reveals lingering hardship. Agriculture remains the primary livelihood for nearly 60% of rural families according to a 2021-22 national survey. Yet, the sector is plagued by small landholdings and a heavy dependence on monsoons and government policy interventions. For most, incomes have not risen in real terms, and the financial strain remains constant.
The sharp rise in self-employment is yet another concern with experts suggesting that this often reflects a lack of better options rather than entrepreneurial spirit. Many rural Indians survive by selling small goods, driving e-rickshaws, or farming just enough to survive, because more secure, better-paying work is simply not available.
Strides in social sectors vs. growing inequality
One of the more encouraging metrics is the decline in multidimensional poverty, which includes aspects such as health, education, and living standards. The percentage of people experiencing multidimensional poverty had dropped from nearly 54% in 2005-06 to just over 16% by 2019-21, although the World Bank’s estimate for 2022-23 puts this slightly lower at 15.5%.
Inequality, on the other hand, remains a sticking point. While the consumption-based Gini index suggests a modest improvement, other sources show income inequality worsening. The top 10% of earners now make 13 times more than the bottom 10% which is a sign of deepening income disparity.
Employment trends are also shifting. Since 2021-22, the rise in the number of jobs has outpaced the increase in the working-age population. Women’s employment is rising, and urban joblessness is now at its lowest for several years. However, challenges such as youth unemployment and informal work persist, particularly in rural areas.
See also: 10 causes of global poverty
While the numbers paint a picture of progress, the lived experience tells a more complex story. Poverty is declining, but the road to lasting economic security – especially in rural India – is still under construction.
