In a striking announcement this April, the World Bank claimed that India has successfully lifted 171 million people out of extreme poverty over the decade spanning 2011-12 to 2022-23. According to its latest Poverty and Equity Brief, extreme poverty in India – defined as living on less than $2.15 per day (in 2017 PPP terms) – dropped from 16.2 percent to a mere 2.3 percent.
At first glance, this seems a staggering achievement for a country historically burdened with widespread deprivation. Yet, as one probes beneath these numbers, a critical question arises: has poverty truly declined to the extent these statistics suggest, or are we witnessing yet another episode of data-driven myth-making divorced from India’s lived realities?
This piece attempts to unpack the duality between official narratives and ground realities, examining whether India’s poverty story is one of substantive transformation or statistical optimism.
The World Bank report noted that rural extreme poverty fell from 18.4 percent in 2011-12 to 2.8 percent in 2022-23, while urban extreme poverty declined from 10.7 percent to 1.1 percent. The gap between rural and urban poverty narrowed from 7.7 to 1.7 percentage points, reflecting an annual decline of 16 percent. Furthermore, India transitioned into a lower-middle-income country during this period, with poverty at the $3.65 per day line falling from 61.8 percent to 28.1 percent, lifting 378 million people out of poverty.
Five populous states – Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh – accounted for 65 percent of India’s extreme poor in 2011-12 and were responsible for two-thirds of the reduction by 2022-23. The World Bank also highlighted that India’s multidimensional poverty index (MPI) – which assesses poverty in health, education, and standard of living – declined from 53.8 percent in 2005-06 to 16.4 percent in 2019-21.
On the employment front, the report pointed to rising employment rates, especially among women, urban unemployment declining to a six-year low of 6.6 percent, and a significant shift in male labor from rural to urban areas for the first time since 2018-19.
While these figures convey optimism, several independent studies and national surveys paint a more nuanced, if not contradictory, picture.
To begin with, the absence of an updated, publicly released official consumption expenditure survey since 2011-12 complicates the poverty measurement exercise. The government withheld the findings of the 2017-18 NSSO consumption survey reportedly due to concerns over data quality, though media leaks indicated a decline in per capita consumption, a critical poverty indicator.
Furthermore, the World Bank’s reliance on modeled estimates and interpolated data raises questions about the data’s accuracy, particularly in capturing post-2019 economic disruptions. India’s economy contracted by 7.3 percent in fiscal year 2020-21 due to the COVID-19 pandemic – the steepest fall in independent India’s history – accompanied by unprecedented reverse migration, job losses, and a surge in informal work. Reports by Azim Premji University’s Center for Sustainable Employment showed that 230 million Indians fell below the national minimum wage poverty line during the pandemic’s peak.
Given this context, the claim that extreme poverty had reduced to just 2.3 percent by 2022-23 merits skepticism. Ground reports from civil society organizations and think tanks suggest persistent food insecurity, debt traps, and distress migration across rural India.
The World Bank figures indicate that rural extreme poverty has dropped dramatically to 2.8 percent, yet rural distress remains palpable. Agricultural wages have stagnated in real terms, and farm incomes remain volatile, heavily dependent on erratic monsoons and government procurement policies. According to the All-India Rural Financial Inclusion Survey 2021-22 by the National Bank for Agriculture and Rural Development, nearly 60 percent of rural households still depend on agriculture, where productivity is low, and 82 percent of farmers operate on marginal or small landholdings.
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) – a crucial buffer for rural households – recorded record demand for work during 2020-21 and 2021-22, exposing the underbelly of rural joblessness. Yet budgetary allocations for MGNREGA have seen cuts in real terms, with wage arrears and delays a chronic issue.
Moreover, the rapid increase in self-employment noted in the World Bank report often masks disguised unemployment. Many rural families resort to marginal livelihoods like petty trading, driving e-rickshaws, or subsistence farming, not by choice but due to a lack of viable alternatives.
Similarly, urban poverty’s reported reduction from 10.7 percent to 1.1 percent appears remarkable, yet India’s informal economy tells another story. Nearly 90 percent of India’s workforce remains informal, devoid of job security, social protection, or labor rights. The pandemic laid bare the vulnerabilities of this workforce as thousands of migrant laborers walked back to their villages amid lockdown-induced unemployment.
CMIE data showed that urban job losses and wage cuts disproportionately affected informal and low-paid workers. Even as urban unemployment rates eased post-2022, underemployment and poor-quality jobs remain endemic. According to the Periodic Labor Force Survey (PLFS) 2022-23, labor force participation rates among urban women hover below 20 percent, while youth unemployment remains alarmingly high. The World Bank’s recognition of a 13.3 percent youth unemployment rate and a staggering 29 percent among tertiary graduates underlines the grim reality of a jobless growth phenomenon.
The sharp fall in India’s MPI from 53.8 percent in 2005-06 to 16.4 percent in 2019-21 is often celebrated. Improvements in electricity access, sanitation, cooking fuel, and school enrolment have been substantial, driven by flagship government schemes like Swachh Bharat Abhiyan, Ujwala Yojana, and Saubhagya.
However, MPI indicators are threshold-based, where crossing a minimum benchmark – for instance, owning a toilet or having a child enrolled in school – can move households out of multidimensional poverty without necessarily translating into sustainable wellbeing. The quality of public services remains a concern. NSSO and NFHS surveys reveal that open defecation continues in many regions despite toilet construction, learning outcomes in public schools are poor, and out-of-pocket health expenditure remains high, pushing millions into debt.
A Brookings Institution analysis from 2022 argued that while India has reduced multidimensional poverty impressively, income inequality and consumption disparities have widened, raising questions about the inclusiveness of the growth process.
Furthermore, the World Bank highlights rising female employment, particularly in rural areas, yet India’s female labor force participation rate (FLFPR) remains among the world’s lowest. As per PLFS 2022-23, the FLFPR was 37 percent in rural and 19 percent in urban areas.
Much of the increase in rural female employment is in agriculture and informal self-employment, often unpaid family labor or low-paid piecework, devoid of social security. The gender gap in paid work remains stark, with 234 million more men employed than women. Without addressing structural constraints like childcare, mobility, and patriarchal norms, female employment gains risk being transitory.
Undoubtedly, India has made significant strides in poverty reduction since the early 2000s, leveraging economic growth, welfare schemes, and infrastructure development. The World Bank’s report captures parts of this success. However, reports of sharp declines in extreme poverty percentages, especially amid economic shocks and absent official consumption data, call for cautious interpretation.
Poverty is a multidimensional, dynamic phenomenon intertwined with inequality, job quality, gender disparities, and regional imbalances. Statistics alone cannot capture its complexities. A narrow focus on monetary thresholds or asset ownership risks overlooking the lived experiences of deprivation, exclusion, and precarity.
As India aims to achieve developed economy status by 2047, the challenge lies not just in reducing poverty numbers but in ensuring dignified livelihoods, equitable access to quality public services, and inclusive growth that leaves no one behind.
The official story may be of triumph, but the street-side reality tells a more complicated tale.