A new World Bank report reveals that India lifted approximately 500 million people out of poverty between 2011 and 2023. During this twelve-year period, the rate of extreme poverty in the world's most populous nation plummeted from 27.1 percent to 2.6 percent. This achievement stands as one of the fastest declines in poverty on record, rivaling only the long-term progress made by China.
The World Bank defined extreme poverty as living on less than three dollars per day. Based on this threshold, the share of India's population below the lower middle-income line of 4.20 dollars per day fell from 57.7 percent to 16.1 percent. Report authors, led by South Asia poverty economist Ayago Wambile, noted that this progress was driven by strong consumption growth, rising employment for women, and expanded social transfers such as food subsidies.
Prime Minister Narendra Modi praised the milestone on social media, describing it as a historic fall in poverty and a generational rise in opportunity. The southern state of Kerala also made headlines in November 2025 by becoming the first Indian state to officially declare itself free from extreme poverty, a status bolstered by its superior education and health statistics.
Economists attribute the reduction in poverty to a combination of factors that have evolved since India opened its economy in the early 1990s. Previous administrations launched schemes such as the National Rural Employment Guarantee Act, which provides rural jobs for at least 100 days a year. The current government has expanded these efforts through direct cash transfers, free rations, and housing projects. Additionally, the expansion of sanitation and piped water infrastructure has improved living standards, with rural water access rising from 17 percent in 2019 to over 80 percent.
Despite these gains, significant concerns remain regarding economic inequality. The 2026 World Inequality Report indicates that India remains one of the most unequal countries globally. The top 10 percent of earners capture approximately 58 percent of national income, while the bottom 50 percent receive only 15 percent. In 2023, median earnings for the top decile were roughly 13 times higher than those of the bottom decile.
Critics argue that while the percentage of poor people has dropped, the absolute number remains high due to India's large population. Santosh Mehrotra, a development economist, noted that India is the only low-middle-income country in the G20. He questioned why the government no longer calculates its own poverty estimates, relying instead on World Bank data. However, Surjit Bhalla, a former IMF executive director, defended the World Bank methodology, stating that it is vetted by Indian scholars and represents a global gold standard for consistency.
Other economists point to structural issues such as stagnant real wages and inadequate public health spending. Jayati Ghosh of the University of Massachusetts Amherst highlighted that India spends just over one percent of its GDP on public healthcare, leaving many citizens to bear the costs themselves. This financial burden, combined with a lack of job opportunities, has contributed to rising youth unemployment, which reached 15.2 percent in March 2026.
To address both poverty and inequality, experts suggest a multi-pronged approach. Dipa Sinha from Azim Premji University advocated for progressive taxation and increased investment in universal public services like health and education. Nitin Kumar Bharti emphasized the need for sustained policy coordination, suggesting that India should look to China's model of combining industrialization with rural income growth. He argued that while physical infrastructure is vital, investments in human capital through schools and hospitals are equally necessary to ensure broad economic inclusion.
