India’s Extreme Poverty Rate Falls to 5.3% in 2022-23: World Bank Report

India has made remarkable strides in reducing extreme poverty, with the rate plunging to 5.3% in 2022-23 from 27.1% in 2011-12, according to the latest World Bank report. Despite the poverty line threshold being revised upwards to $3 per day to account for inflation and purchasing power parity, India has successfully lifted 171 million people out of extreme poverty over the past decade. This achievement underscores the impact of sustained economic growth, social welfare initiatives, and targeted poverty alleviation programs.

Why in News?

The World Bank’s recent report on poverty reduction in India draws global attention as it reveals substantial progress amid economic challenges. The updated poverty line of $3 per day reflects a more realistic measure of deprivation, making India’s success even more significant. With continued economic uncertainties and global risks looming, the report serves as a vital indicator of India’s developmental trajectory and the effectiveness of its policies in addressing poverty and inequality.

Aim and Objectives

• To highlight India’s substantial reduction in extreme poverty over the last decade.
• To understand the factors and policies contributing to this success.
• To analyze the updated poverty thresholds and their implications for policy and planning.

Background

• In 2011-12, India’s extreme poverty rate stood at 27.1% based on the $2.15 per day threshold.
• The World Bank revised the global extreme poverty line to $3 per day (2021 PPP) to adjust for inflation and updated cost of living, raising the benchmark for poverty measurement.
• India’s economic growth, combined with social welfare schemes such as free/subsidised food transfers, helped in reducing poverty.
• The rural-urban poverty gap has narrowed significantly, highlighting inclusive growth patterns.

Static Facts and Figures

• Extreme poverty rate (at $3 per day) declined to 5.3% in 2022-23 from 27.1% in 2011-12.
• Around 54.7 million people lived below the $3/day threshold in 2024, representing 5.44% of the population.
• The number of people lifted from extreme poverty during 2011-12 to 2022-23: approximately 171 million.
• Extreme poverty rate dropped from 16.2% to 2.3% at the $2.15/day line.
• Rural extreme poverty fell from 18.4% to 2.8%, urban extreme poverty from 10.7% to 1.1%.
• The rural-urban poverty gap narrowed from 7.7 percentage points to 1.7 points, indicating reduced disparity.
• Five most populous states account for 54% of India’s extremely poor population.
• India’s real GDP as of FY25 remains about 5% below pre-pandemic levels but is expected to recover by 2027-28.

Overall Significance

• The decline in poverty highlights India’s progress in social and economic development.
• Improved access to food and social welfare programs have been crucial in reducing deprivation.
• Narrowing rural-urban gap indicates more balanced growth across sectors and regions.
• The findings stress the importance of sustained policy support amid global economic uncertainties.
• Continued vigilance is required as global trade tensions and other risks could impact future growth and poverty reduction.