India has witnessed a remarkable reduction in extreme poverty, with nearly 270 million people lifted out of it between 2011-12 and 2022-23, according to recent data from the World Bank. This significant decline is reflected in the drop of the extreme poverty rate from 27.1% to just 5.3% over the same period. This progress is particularly noteworthy given the World Bank's revision of the international poverty line.
The World Bank has updated its international poverty line for low-income countries to $3 per person per day, up from the previous $2.15. For lower-middle-income countries, the line has changed from $3.65 to $4.20 per day, and for upper-middle-income countries, it has increased from $6.85 to $8.40. Despite this raised threshold, India has demonstrated a substantial reduction in poverty. The revised extreme poverty line of $3, accounting for India's inflation rate between 2017 and 2021, is 15% higher than the previous $2.15. Using this new line, the poverty rate in India for 2022-23 stands at 5.3%. Furthermore, using the new poverty line for lower-middle-income countries at $4.20 per day per person, India's poverty rate fell to 23.9% in 2022-23 from 57.7% in 2011-12.
In absolute numbers, the decline is striking. The number of people living in extreme poverty in India fell from 344.47 million in 2011-12 to 75.24 million in 2022-23. The progress has been widespread across both rural and urban areas. Rural poverty decreased from 18.4% to 2.8%, while urban poverty fell from 10.7% to 1.1% during the same period. The narrowing of the rural-urban poverty gap is also a positive sign, indicating more equitable development.
Several factors have contributed to India's success in poverty reduction. Targeted government initiatives, such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Pradhan Mantri Awas Yojana (PMAY), and Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM), have played a crucial role. These programs focus on providing employment opportunities, housing, and access to livelihoods for the rural poor. Other schemes like Pradhan Mantri Jan Dhan Yojana, which promotes financial inclusion, and Ayushman Bharat, which expands access to healthcare, have also contributed to poverty alleviation. Free and subsidized food transfers through the Public Distribution System (PDS) have also supported poverty reduction, ensuring access to essential food grains for vulnerable populations. Digital inclusion and improved rural infrastructure have further enhanced service delivery and empowered people to rise out of poverty.
The World Bank has also acknowledged India's strong improvement in reducing multidimensional poverty, which includes factors such as health, education, and standard of living. India's Multidimensional Poverty Index (MPI) has dropped significantly, indicating improvements in these key areas.
While India has made significant strides in poverty reduction, challenges remain. Income inequality persists, and disparities in access to opportunities and resources between urban and rural areas continue to exist. Focused strategies such as targeted spending on health and education, and bridging social inequities are required to tackle these challenges.
The five most populous states - Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh - accounted for 65% of India's extreme poor in 2011-12, highlighting the need for targeted interventions in these regions.
India's remarkable progress in reducing extreme poverty is a testament to its commitment to evidence-based governance and sustained reforms. With continued efforts and targeted policies, India is well-positioned to achieve further reductions in poverty and improve the living standards of its citizens.
