World Bank: Extreme Poverty in India Falls Sharply, but the Earnings Gap Stays Wide
The World Bank's latest Poverty and Equity Brief for India shows a steep fall in poverty over a little more than a decade.
Extreme poverty, measured at the international poverty line of $3.00 a day (in 2021 purchasing power parity, or PPP, terms), fell from 27.1% in 2011 to 2.6% in 2023.
At the higher $4.20 a day line used for lower-middle-income countries, the poverty rate fell from 57.7% to 16.1% over the same period, which the World Bank links to about 496 million people moving above that line.
Poverty is still higher in villages (19.3% rural against 8.6% urban in 2023, at the $4.20 line), and a belt of states from Uttar Pradesh to West Bengal holds about 57% of India's poor.
The World Bank also points to a large gap in earnings: the median earnings of the top 10% of earners are about 13 times those of the bottom 10%.
It projects that poverty at the $4.20 line will keep falling, but more slowly, to about 12.1% by 2028.
Poverty Measurement in India: Methods and Debates
Poverty measurement means deciding who counts as poor and how many such people there are. India has long used a poverty line: the amount of money a person needs each month to meet basic needs. Anyone whose monthly spending (consumption) falls below that line is counted as poor. The World Bank uses a similar idea with international poverty lines expressed in dollars a day, adjusted for price differences between countries.
The World Bank's numbers for India come from the HCES 2022-23 and 2023-24 rounds, converted with 2021 PPP. They show extreme poverty at only 2.6% in 2023, but 16.1% of people still below the $4.20 line, which is the more relevant line for a lower-middle-income country like India.
Gini Coefficient: How Economists Measure Inequality
The Gini coefficient is a single number that shows how unequally income, spending or wealth is shared among the people of a country. It runs from 0 to 1 (or 0 to 100 when written as the Gini index). 0 means perfect equality: everyone has exactly the same. 1 (or 100) means perfect inequality: one person has everything and everyone else has nothing. So a lower Gini means a more equal society.
The World Bank's brief shows poverty falling fast, but also that the top 10% of earners take home about 13 times what the bottom 10% earn. This is the classic gap between poverty and inequality: fewer people are below the poverty line, yet the distribution of earnings, which tools like the Gini coefficient and decile ratios measure, remains very unequal.
- Extreme poverty ($3.00/day, 2021 PPP): 27.1% (2011) → 2.6% (2023)
- Poverty at $4.20/day: 57.7% (2011) → 16.1% (2023); about 496 million people moved above this line
- Rural poverty 19.3% vs urban 8.6% (2023, $4.20 line)
- About 57% of India's poor live in a belt from Uttar Pradesh to West Bengal
- Median earnings of the top 10% are about 13 times those of the bottom 10%
- Projection: poverty at $4.20/day to fall to about 12.1% by 2028
- India's consumption Gini (World Bank): 25.5 in 2022-23