India’s Remarkable Decline in Extreme Poverty

India has made significant strides in reducing extreme poverty, with the rate plummeting from 27.1% in 2011-12 to a mere 5.3% in 2022-23, according to data based on the World Bank’s updated global poverty line of $3 per day (2021 Purchasing Power Parity – PPP).

This achievement comes amidst a revision of global poverty thresholds by the World Bank in 2022. The new extreme poverty line was raised from $2.15 to $3 per day (2021 PPP) to better account for rising living costs and evolving consumption patterns worldwide. For Lower Middle-Income Countries (LMICs), the poverty line increased from $3.65 to $4.20 per day, and for Upper-Middle-Income Countries, it is now $8.30. These updated thresholds aim to provide a more accurate reflection of current economic realities and inflation.

India’s Progress Across Thresholds:

Beyond the updated $3/day threshold, India’s progress is evident across other poverty lines:

• At the older $2.15/day threshold, extreme poverty in India fell dramatically from 16.2% to 2.3%, indicating a near-elimination of this level of deprivation and sustained improvements in consumption and welfare.
• Under the LMIC poverty line of $4.20/day, poverty declined from 57.7% to 23.9%, showcasing enhanced resilience and upward income mobility among lower-middle-class households.

Overall, the number of individuals living in poverty in India decreased from 344 million to 75 million, a testament to robust economic growth and effective social welfare initiatives.

Addressing Disparities and Multidimensional Poverty:

While impressive, the decline in poverty also highlights existing disparities:

• Rural-Urban Divide: Rural poverty saw a substantial drop from 18.4% to 2.8%, while urban poverty decreased from 10.7% to 1.1%. This success in rural areas is largely attributed to welfare schemes like MGNREGA and PMAY-Gramin.
• Educational Inequalities: A stark contrast remains in poverty rates based on education levels, with 35.1% of individuals with no formal education still living in poverty, compared to only 14.9% of those with post-secondary education.

Beyond income, India has also made significant strides in multidimensional poverty (MPI). The MPI, which considers non-income factors like health, education, and living standards, fell from 53.8% in 2005-06 to 15.5% in 2022-23. NITI Aayog data further supports this, showing a reduction from 29.17% to 11.28%. This indicates that poverty reduction in India is not merely monetary but reflects inclusive development and improved access to basic services for marginalized communities.

Rising Consumption:

Consumption trends further underscore the improved quality of life. The Rural Monthly Per Capita Expenditure (MPCE) increased from ₹1,430 in 2011–12 to ₹2,079 in 2023–24, while urban MPCE rose from ₹2,630 to ₹3,632 during the same period. These rising consumption levels signify enhanced purchasing power among the populace.