Global Poverty at Crossroads: India's
Remarkable Path Amidst a "Lost Decade"
The latest World Bank reports on
poverty paint a stark picture: the global fight against extreme poverty is at a
near standstill, threatening to make the current decade a "lost" one
for poverty eradication. However, amidst this challenging backdrop, India
emerges as a powerful counter-narrative, demonstrating significant strides
in lifting millions out of poverty, even as global thresholds rise and multiple
crises converge.
The World Bank's "Poverty,
Prosperity, and Planet Report 2024" and related updates in June 2025 offer
a comprehensive look at global poverty, with India emerging as a significant
case study.
New International Poverty Line:
Globe : The World Bank has officially
updated the global extreme poverty line to $3.00 per person per day (2021
PPP), a notable increase from the previous $2.15/day (2017 PPP). This
adjustment reflects the evolving cost of living in low-income countries and
aims for a more accurate representation of global poverty.
India : This new line has a significant
impact. While the global extreme poverty count increased by 125 million people
due to this higher threshold, India's robust poverty reduction figures, based
on its latest Household Consumption and Expenditure Survey (HCES) 2022-23, have
somewhat offset this global increase. For India, under the new $3.00/day line,
the extreme poverty rate stood at 5.3% in 2022-23, a sharp decline from
27.1% in 2011-12. This translates to a significant number of people moving out
of this revised poverty definition.
Slowdown in Poverty Reduction:
Globe: The report highlights a concerning
trend: the pace of global poverty reduction has slowed dramatically, almost to
a standstill. This suggests that achieving the UN Sustainable Development Goal
of eradicating extreme poverty by 2030 is increasingly unlikely. The period
from 2020-2030 is feared to be a "lost decade" for poverty
eradication efforts.
India: India, however, is a notable
exception to this global slowdown. Its substantial progress in poverty
reduction, particularly between 2011-12 and 2022-23, stands in stark contrast
to the general global trend. While other regions struggle, India has managed to
maintain a strong downward trajectory in its poverty rates.
Current Extreme Poverty Figures:
Globe: Even with the new $3.00/day line,
almost 700 million people globally remain in extreme poverty. Using the older,
still often referenced, $2.15/day line, the number remains high, underscoring
the scale of the challenge.
India: India has made remarkable strides.
While 129 million Indians were estimated to live in extreme poverty (less than
$2.15/day) in 2024, this is a dramatic reduction from 431 million in 1990. More
recent data for 2022-23 indicates that India's extreme poverty rate using the
$2.15/day line has fallen to just 2.3%, translating to approximately 33.6
million people. This is a massive achievement. When considering the new
$3.00/day line, India's extreme poor count is around 75.2 million in
2022-23.
Concentration in Sub-Saharan Africa:
Globe: Sub-Saharan Africa is increasingly
becoming the epicentre of extreme poverty, accounting for about two-thirds of
the world's extreme poor. This region faces unique challenges that hinder
poverty reduction.
India: This point highlights India's
divergent path. While Sub-Saharan Africa struggles with a concentration of
poverty, India has actively decentralized its poverty, bringing down rates
across its vast and populous states. India's success significantly reduces its
share of global extreme poverty.
Impact of Polycrisis:
Globe: The "polycrisis" – a
combination of slow economic growth, the lingering effects of the COVID-19
pandemic, rising global debt, increasing conflict and fragility, and severe
climate-related shocks – has significantly undermined poverty reduction efforts
worldwide.
India: India, despite facing its own share
of these global challenges (e.g., economic slowdowns, pandemic impact, climate
events), has demonstrated resilience in its poverty reduction efforts.
Government initiatives like free and subsidized food transfers and other
welfare programs are cited as factors that helped mitigate the impact of these
crises on the most vulnerable.
Poverty Above Pre-Pandemic Levels in
Poorest Countries:
Globe: In many of the poorest economies,
extreme poverty levels remain higher than they were before the COVID-19
pandemic, signalling a regressive trend in these vulnerable nations.
India: In contrast, India has managed to
bring its extreme poverty rates below pre-pandemic levels. The latest World
Bank data suggests that India's recovery from the pandemic's economic shocks
has been more effective in protecting its vulnerable population from falling
back into extreme poverty.
Higher Poverty Lines Reveal Wider
Poverty:
Globe: When a higher poverty standard, more
typical of upper-middle-income countries ($6.85 per person per day), is used,
almost half of the world's population (around 3.5 billion people) remains in
poverty, and this number has stagnated since the 1990s due to population
growth.
India: For India, 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% in 2011-12 to 23.9% in
2022-23. Even at the $6.85/day line, more Indians are currently below this
line than in 1990, primarily due to population growth, highlighting that while
extreme poverty is down, a significant portion of the population still lives
with limited economic buffers.
Stalled Shared Prosperity:
Globe: Progress in shared prosperity,
measured by income growth for the bottom 40% of the population, has also slowed
globally, indicating that economic gains are not being sufficiently shared
across all segments of society.
India: While specific data on shared
prosperity for the very latest period for India might require deeper dives into
the report, India's overall poverty reduction and improvements in consumption
inequality (Gini coefficient decreased from 0.266 to 0.237 in rural areas and
from 0.314 to 0.284 in urban areas between 2022–23 and 2023–24) suggest a move
towards more inclusive growth, though challenges in income distribution may
still exist, especially considering the formal vs. informal employment
dynamics.
Persistent Inequality:
Globe: Income inequality remains high in
many parts of the world, especially in regions like Latin America and
Sub-Saharan Africa.
India: India has shown improvements in
consumption inequality, as indicated by the Gini coefficient. However, the
World Inequality Report 2022 indicates that in India, men earn 82% of the
labour income, while women earn only 18%, pointing to significant gender-based
income disparities. Overall, despite poverty reduction, challenges related to
income inequality persist.
Climate Change as a Fundamental Risk:
Globe: Climate change is a major threat to
poverty reduction, with nearly one in five people globally vulnerable to severe
welfare losses from extreme weather events.
India: India is highly vulnerable to
climate change impacts, with a large population dependent on agriculture and
living in climate-sensitive regions. This poses a significant risk to the
sustained progress in poverty reduction, as climate shocks can push vulnerable
populations back into poverty.
Disproportionate Impact of Climate on
the Poor:
Globe: Poor communities, especially in
rural areas, are more exposed to and less resilient against climate risks,
often lacking access to adaptive measures and recovery support.
India: This is particularly relevant for
India, where a substantial portion of the population resides in rural areas and
is engaged in climate-dependent livelihoods. Extreme weather events like
floods, droughts, and heatwaves disproportionately affect these vulnerable
communities, undermining their economic stability.
Debt Burden in Developing Countries:
Globe: The pandemic and other shocks have
led to a significant increase in public debt in developing countries, diverting
resources from essential public services.
India: While India's external debt
situation is managed, the overall debt burden on the government can impact its
ability to fund social welfare programs crucial for poverty alleviation,
especially amidst increased spending needs and potential global economic downturns.
Need for Faster and More Inclusive
Growth:
Globe: Sustainable poverty eradication
requires not just growth, but growth that is faster and more inclusive,
creating better job opportunities for the poor.
India: India's recent economic growth has
been significant, contributing to poverty reduction. However, the challenge
lies in ensuring this growth translates into high-quality, formal jobs across
all sectors, especially for the large informal workforce. The report implicitly
suggests that India's recent growth has been conducive to poverty reduction.
Investment in Human and Physical
Capital:
Globe: Investing in education, healthcare,
and infrastructure is vital to empower the poor and enable their participation
in economic growth.
India: India has made significant
investments in these areas through various government schemes (e.g., Ayushman
Bharat for healthcare, Jan Dhan Yojana for financial inclusion, PM Awas Yojana
for housing, Jal Jeevan Mission for water). These investments have played a
crucial role in the observed multidimensional poverty reduction.
Importance of Social Protection:
Globe: Many people in poverty, particularly
in Sub-Saharan Africa, lack access to adequate social protection systems.
India: India has extensive social
protection programs, including the Targeted Public Distribution System (TPDS)
providing subsidized food grains, MGNREGA for rural employment, and various
direct benefit transfer (DBT) schemes. These safety nets have been instrumental
in protecting vulnerable households from economic shocks and contributing to
poverty reduction.
India's Significant Progress
(Statistical Outlier):
Globe: India's performance stands out as a
positive outlier in the global poverty landscape.
India: As mentioned earlier, India has
lifted a massive number of people out of extreme poverty. Under the $2.15/day
line, 171 million people were lifted between 2011-12 and 2022-23. Using
the $3.65/day line (lower-middle-income), this figure rises to 378 million
people in the same period. This scale of poverty reduction is unparalleled
in recent global history.
India's Revised Poverty Profile:
Globe: The World Bank's revised data for
India, based on the HCES 2022-23, has led to a significant recalculation of
India's poverty rates.
India: The extreme poverty rate in India
(using the $2.15/day line) plummeted from 16.2% in 2011-12 to a remarkable 2.3%
in 2022-23. Even with the new, higher $3.00/day line, the rate for India in
2022-23 is reported at 5.3%, showing substantial progress despite the
elevated threshold.
Multidimensional Poverty Reduction in
India:
Globe: Multidimensional poverty considers
deprivations beyond just income, including health, education, and living
standards.
India: India has achieved significant
success in reducing multidimensional poverty. The World Bank's Multidimensional
Poverty Index (MPI) for India, which includes extreme poverty but excludes
nutrition and health deprivation, indicates that non-monetary poverty
(deprivation in education and basic services) declined from 53.8% in 2005-06 to
16.4% in 2019-21, and further to 15.5% in 2022-23. NITI Aayog's
estimates show a reduction from 29.17% in 2013-14 to 11.28% in 2022-23.
Narrowing Rural-Urban Poverty Gap in
India:
Globe: Poverty often has distinct rural and
urban characteristics, with rural areas typically showing higher rates.
India: India has successfully narrowed the
gap between rural and urban poverty. Using the $2.15/day line, rural extreme
poverty dropped from 18.4% to 2.8%, and urban poverty fell from 10.7% to 1.1%
between 2011-12 and 2022-23. This is a significant narrowing of the rural-urban
poverty gap from 7.7 to 1.7 percentage points, with an annual decline rate of
16%.
Challenges in Formal Employment and
Gender Gaps (India specific):
Globe: While not always explicitly a global
"major point" in every report summary, labour market dynamics and
gender equality are persistent global challenges impacting poverty.
India: Despite overall positive employment
trends and poverty reduction, challenges remain. Only about 23% of non-farm
paid jobs in India are formal, indicating a large informal sector with
limited social security. Furthermore, significant gender disparities persist in
paid work. While the female employment rate is around 31%, there are 234
million more men in paid work than women. The World Economic Forum's Global
Gender Gap Report 2025 ranked India 131st out of 148 countries, highlighting
the persistent gender pay gap and the low share of women in senior management
and political roles. These issues underline the need for targeted policies to
promote formalization and gender equality to ensure truly inclusive prosperity.
The Path Forward: Lessons from
India's Experience
The World Bank's report is a critical
reminder that while the global fight against poverty faces significant
headwinds, it is not an insurmountable task. India's journey offers valuable
lessons: a combination of sustained economic growth, robust social protection,
strategic investments in human capital, and targeted interventions can yield
remarkable results.
However, the global community,
including India, must double down on efforts to ensure growth is not just
faster but also more inclusive, addressing inequalities, creating formal
employment opportunities, and building resilience against the escalating threats
of climate change. The ambition of eradicating extreme poverty by 2030 remains
distant, but India's recent achievements offer a glimmer of hope and a
blueprint for other nations grappling with similar challenges.
