How India pulled 500 million people out of poverty, as inequality deepens | Poverty and Development News
World Bank Reports Significant Poverty Reduction in India
India has successfully lifted approximately 500 million individuals out of poverty between 2011 and 2023, marking a decline in extreme poverty from 27.1 percent to 2.6 percent, according to a recent report from the World Bank. This achievement places India alongside China, which removed over 800 million people from extreme poverty over a span of 40 years.
While this reduction is significant in a country with a population of 1.4 billion, the World Bank report highlights a growing disparity in income and wealth inequality since India opened its economy in the early 1990s. The 2026 World Inequality Report indicates that inequality in India remains among the highest globally.
Key Findings of the World Bank Report
The World Bank’s report defines extreme poverty as living on less than $3 a day. It calculates that 496 million people have emerged from poverty as the proportion of individuals living below the lower middle-income threshold of $4.20 a day decreased from 57.7 percent to 16.1 percent.
Ayago Wambile, a poverty economist with the World Bank, noted that the decline in poverty is expected to continue, albeit at a slower pace, with projections indicating a drop in the $4.20 a day poverty rate from 14.2 percent in 2026 to 12.1 percent by 2028. The report attributes this progress to strong consumption growth, increased employment—particularly among women—and expanded social assistance programs, including food subsidies.
Impact and Reactions
The World Bank has characterized India’s near elimination of extreme poverty in just over a decade as “remarkable progress” and one of the fastest declines in the world. To determine poverty rates, the analysis relied on Household Consumption Expenditure Surveys conducted by the National Sample Survey Organisation (NSSO).
Prime Minister Narendra Modi acknowledged the progress on social media, calling it a “historic fall in poverty.” Meanwhile, the southern state of Kerala recently declared itself the first Indian state to be free from extreme poverty, boasting the highest educational and health indicators among Indian states.
Challenges Ahead
Despite these advancements, experts emphasize that the absolute number of impoverished individuals remains the highest in the world, with approximately 233 million people still living below the $4.20 daily poverty line.
Concerns regarding the sustainability of India’s welfare programs persist. Economists have noted that government-provided free food grains merely address caloric needs without improving nutritional quality. Additionally, some question the lack of a national poverty measurement by the Indian government, which now relies solely on World Bank estimates.
Critics argue that without targeted investment in public services and education, India may struggle to address the root causes of inequality. The 2026 World Inequality Report reveals that the top 10 percent of earners in India receive about 58 percent of national income, while the bottom 50 percent account for only 15 percent. Existing structural inequalities and inadequate public investment in education and health further exacerbate these disparities.
Moving Forward
Economists advocate for a comprehensive approach to simultaneously tackle poverty and income inequality in India. Dipa Sinha, a development economist, suggests implementing progressive taxation and investing in universal public services to achieve these goals.
Experts also recommend that India learn from China’s successful agricultural and industrial policies. A diverse policy focus that balances infrastructure with investments in health and education is essential for genuine economic inclusion.
In summary, while India’s progress in poverty reduction is commendable, addressing the widening income gap and disparities in opportunities remains a critical challenge for the nation.
