India

India Lifts Nearly 500 Million From Poverty, Yet Inequality Widens

By Priyanka Shankar

India has lifted almost 500 million people out of poverty between 2011 and 2023, with extreme poverty falling from 27.1 percent to 2.6 percent, a World Bank report says. The decline, measured against a $3‑a‑day threshold, is the fastest among major economies, second only to China’s 800‑million lift over 40 years. The same report notes that the share of Indians living below the lower‑middle‑income line of $4.20 a day dropped from 57.7 percent to 16.1 percent. World Bank South Asia poverty economist Ayago Wambile, who led the study, projects the $4.20 threshold to fall from 14.2 percent in 2026 to 12.1 percent by 2028, driven by consumption growth, rising employment—especially for women—and expanded social transfers such as food subsidies.

The World Bank used Household Consumption Expenditure Surveys conducted by India’s National Sample Survey Organisation. It praised the decline as “remarkable progress” and noted that India’s economic growth forecast was raised to 7.1 percent. Prime Minister Narendra Modi highlighted the fall in poverty in a recent Instagram post, calling it a “historic fall” and a “generational rise in opportunity.” Kerala became the first state to declare itself free of extreme poverty in November.

Economists point to a mix of factors. Since the early 1990s, successive governments have introduced or expanded welfare schemes, including rural employment guarantees, direct cash transfers, free rations, housing, and sanitation projects. Under Modi, free food grains reach about 800 million people, and rural access to piped water rose from 17 percent in 2019 to over 80 percent. A 2024 Brookings paper by Surjit Bhalla and Karan Bhasin notes that safe water access may have helped families earn more.

Critics argue that free food grain programmes only meet caloric needs and may not be sustainable. They also question India’s reliance on World Bank poverty lines instead of developing a domestic measure. Bhalla counters that World Bank methodology is vetted by each country.

Despite poverty decline, income inequality remains high. The 2026 World Inequality Report ranks India among the most unequal nations, with the top 10 percent earning about 58 percent of national income while the bottom 50 percent receive only 15 percent. Wage disparities are stark: in 2023, median earnings of the top 10 percent were roughly 13 times those of the bottom 10 percent. Youth unemployment rose from 13.8 percent in April 2025 to 15.2 percent in March 2026, with nearly 40 percent of 15‑25‑year‑olds unemployed.

Economists say that growing inequality undermines the benefits of poverty reduction by limiting access to education, health, and capital, and by concentrating economic and political influence. Dipa Sinha of Azim Premji University calls for progressive taxation and universal public services to address both poverty and inequality. Nitin Kumar Bharti suggests that India should learn from China’s balanced focus on physical infrastructure and human capital investment.

The World Bank report concludes that while extreme poverty has fallen, 233 million people still live below the $4.20‑a‑day line, indicating that continued effort is needed to sustain and deepen gains.