NEW DELHI: India’s extreme poverty rate has declined significantly to 5.3 per cent in 2022-23 from 27.1 per cent in 2011-12, even after the World Bank raised the global poverty threshold to $3 per day.
Based on India’s inflation between 2017 and 2021, the revised threshold of $3 per day – expressed in 2021 prices – represents a 15 per cent higher benchmark than the previous $2.15 level.
Yet, even at this higher benchmark, India’s poverty rate stood at just 5.3 per cent in 2022-23, the World Bank said in a recent report.
The number of Indians living below the new $3 poverty line fell from 34 crore in 2011-12 to 7.5 crore in 2022-23.
The World Bank recently announced a major revision to its global poverty estimates, raising the International Poverty Line from $2.15/day (2017 PPP) to $3/day (2021 PPP).
According to a Press Information Bureau (PIB) factsheet, this change increased the global count of people in extreme poverty by 125 million. However, India emerged as a statistical outlier, with improved survey methods and revised data showing a steep drop in poverty levels.
Globally, the new poverty threshold would have added 226 million to the count of extremely poor. But India alone accounted for a reduction of 125 million, offsetting more than half the increase.
In 2024, an estimated 5.44 per cent of India’s population—or about 5.47 crore people—were living on less than $3 per day, the report said.
India also made notable progress under other poverty metrics. The extreme poverty rate at the $2.15 line fell from 16.2 per cent in 2011-12 to 2.3 per cent in 2022-23.
The poverty rate at the lower-middle-income country threshold dropped by 33.7 percentage points during the same period.
The World Bank highlighted that India’s poverty reduction was supported by subsidised food transfers and a narrowing gap between rural and urban poverty levels.
Rural extreme poverty
Rural extreme poverty declined from 18.4 per cent to 2.8 per cent, while urban poverty dropped from 10.7 per cent to 1.1 per cent. The rural-urban poverty gap narrowed from 7.7 to 1.7 percentage points.
Five of India’s most populous states account for 54 per cent of the remaining extremely poor, the report added.
On the broader economic outlook, the World Bank noted that India’s real GDP in FY25 is still around 5 per cent below its pre-pandemic trend. Growth is expected to gradually return to potential by 2027-28, assuming global uncertainties are resolved in an orderly manner.
Risks to the outlook remain, including policy shifts and elevated trade tensions that could weaken export demand and delay investment recovery.
The current account deficit (CAD) is projected to average 1.2 per cent of GDP over FY26-28 and is expected to be financed by stable capital inflows. Foreign exchange reserves are projected to remain around 16 per cent of GDP.
In total, India lifted 171 million people out of extreme poverty between 2011-12 and 2022-23, the World Bank said.
