India lifted nearly 500 million out of poverty in 12 years, yet inequality deepens: World Bank

According to a new report by the World Bank, India lifted nearly 500 million people out of poverty between 2011 and 2023. In the world's most populous nation, the extreme poverty rate fell over this period from 27.1 percent to 2.6 percent.

The calculation uses an extreme poverty threshold of $3 a day. Extreme poverty means lacking the minimum money needed for basic essentials such as food, water, shelter and clothing. The Bank estimated poverty metrics based on three official household surveys.

The report said an estimated 496 million people have been lifted out of poverty as the share of India's population living below the lower middle-income poverty threshold of $4.20 a day fell from 57.7 percent to 16.1 percent. The authors, led by the World Bank's South Asia poverty economist Ayago Wambile, wrote that poverty is projected to continue declining, albeit more gradually, with the poverty rate at the $4.20/day line expected to fall from 14.2 percent in 2026 to 12.1 percent by 2028.

In the authors' words, 'This progress was mainly driven by strong consumption growth, rising employment, especially among women, and expanded social transfers, including food subsidies.' The World Bank lauded India lifting nearly 500 million out of poverty in 12 years as 'remarkable progress' and described the downward trend as one of the fastest poverty declines in the world. To determine India's poverty rates, the Bank used Household Consumption Expenditure Surveys conducted by the National Sample Survey Organisation (NSSO), an Indian government body.

The only other parallel on this scale is China. A 2022 report jointly produced by the World Bank and the Chinese Finance Ministry said China had lifted more than 800 million people out of extreme poverty, though that was over a period of 40 years. Last month, the World Bank also raised its economic growth forecast for India to 7.1 percent.

In a post on Instagram on Sunday, Prime Minister Narendra Modi lauded the country's progress, writing: 'A historic fall in poverty. A generational rise in opportunity.' Last November, the southern state of Kerala became the first in the country to officially declare itself free from extreme poverty; Kerala has the best education and health statistics of major Indian states.

Santosh Mehrotra, a development economist formerly in India's planning commission and currently a visiting professor at the Higher School of Economics in Moscow, noted that India is the only low-middle-income country among G20 nations, which are otherwise upper-middle- or high-income nations. He said: 'The absolute number of the poor in our country is still the highest in the world for sheer size of population. So therefore, if we are going to genuinely reduce the incidence of poverty and more importantly, the absolute number of the poor, then it makes a huge difference globally.'

Economist Surjit Bhalla, a former executive director at the International Monetary Fund, said that coming from the World Bank, the credibility of the analysis is above question, and that any data from the World Bank is the 'gold standard'. He said the institution carries out a poverty analysis for every country using a per capita consumption level normalised globally by invoking purchasing power parity.

Economists point to a series of programmes behind the poverty decline. Poverty in India has been declining since the country opened its economy in the early 1990s, setting the stage for more than three decades of fast economic growth, and successive governments have launched, continued or reworked social welfare schemes. Modi's predecessor Manmohan Singh launched an employment scheme that guaranteed rural jobs for a minimum of 100 days per year. Since coming to power in 2014, Modi has launched schemes including direct cash transfers, free rations and housing; the current administration provides free food grains to about 800 million Indians. Under Modi, toilet construction has expanded significantly, especially in rural India, and access to piped drinking water has risen from 17 percent of rural homes in August 2019 to more than 80 percent, according to government statistics.

Economists Surjit Bhalla and Karan Bhasin wrote in a March 2024 research paper for the Brookings Institution: 'The reduced sickness from accessing safe water may have helped families earn more income.' But in their 2025 paper they also pointed out that free food grains supplied to 800 million people only fulfilled their calorific needs, and that more balanced food subsidies better targeted to the genuine poor would improve nutritional outcomes. It is also unclear whether providing free food supplies indefinitely to more than half of the country's population is sustainable for the government, and whether that programme points to deep economic distress mitigated only by state assistance.

Mehrotra questioned why the Indian government no longer determines its own poverty level. He said that since 2014, when Modi came to power, the government has stopped calculating its own poverty levels, instead relying entirely on World Bank estimates: 'We are a strange country in having adopted an international organisation's poverty line as our own.' For a country as large, diverse and complex as India, he argued, a standard set by an international agency alone is not enough, since consumption baskets change over time — ten years ago not everyone had phones, today even in rural areas people do — and India should have set its own poverty line. Bhalla pushed back, saying the World Bank's methodology and estimates are vetted by every country before the final data is published, and in India's case Indian scholars and the government went through the analysis, so there is no ideological basis for questioning the data.

Yet despite the dramatic fall in poverty, inequality in India remains among the highest in the world, according to the 2026 World Inequality Report, with the income and wealth gap widening significantly. Jayati Ghosh, an economist and professor at the University of Massachusetts Amherst, said India's healthcare and nutrition indices remain major causes for concern: the country spends just over 1 percent of its GDP on public healthcare, ranks far behind global peers in per capita health investment, leaves public hospitals chronically underfunded and overburdened, and citizens bear the brunt of total health expenditures, a burden that pushes millions of Indians into poverty or debt every year. Ghosh also pointed out that real wages have stagnated in India and that, according to the World Bank report, wage disparities remain even as poverty has declined.