India Defies Global Poverty Trends Amid World Bank's Revised Estimates: What Does This Mean?

News18

08-06-2025

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While the revision led to a global increase in the count of extreme poverty by 125 million, India not only withstood the raised threshold but demonstrated a massive drop in poverty
India has emerged as a statistical outlier in a positive direction as the World Bank revised global poverty estimates, raising the International Poverty Line from USD 2.15 to USD 3.00 per day (based on 2021 purchasing power parity).
While the change led to a global increase in the count of extreme poverty by 125 million, India not only withstood the raised threshold but also demonstrated a massive reduction in poverty, as per a central government fact sheet analysis. This was done using more refined data and updated survey methods.
The new poverty line would have increased the count of global extreme poverty by 226 million people. But, due to India's data revision, the net global increase was only 125 million.
WHAT DOES THE DATA SAY?
According to World Bank data, over the decade from 2011-12 to 2022-23, India has lifted 171 million people out of extreme poverty (under USD 2.15 per day).
The overall poverty rate dropped from 16.2 per cent to 2.3 per cent, or 5.3 per cent, when using the updated global benchmark (USD 3.00 per day) while accounting for purchasing power parity (PPP) adjustments.
The data further showed reduction in rural poverty down to 2.8 per cent and urban to only 1.1 per cent, with widening access to food‑security schemes playing a key role. Challenges, however, remain in the form of urban youth unemployment and persistent wage inequality.
WHY WAS THE POVERTY LINE REVISED?
The World Bank said most of this upward revision is explained by revisions in the underlying national poverty lines rather than a change in prices.
Here is what the new International Poverty Line (IPL) reflects:
HOW DID INDIA INFLUENCE THE WORLD BANK'S GLOBAL BENCHMARK?
This adjustment was expected to sharply increase the global count of those living in extreme poverty which was visible on poverty figures, estimated at 226 million people.
According to the central government's fact sheet analysis, India's newly revised poverty data significantly softened the blow, reducing the count by 125 million. These figures offset more than half the global increase.
India's updated consumption data significantly influenced the World Bank's global benchmark. The standout performance is largely attributed to improvements in data collection and measurement methods, which captured more actual spending leading to a more realistic poverty line and a lower poverty rate despite the increase in threshold.
The country's latest Household Consumption Expenditure Survey (HCES) adopted the Modified Mixed Recall Period (MMRP) method, replacing the outdated Uniform Reference Period. This change provided a more accurate picture of household consumption, more effectively capturing actual spending.
As a result, India's poverty rate in 2022-23 stood at just 5.25 per cent under the new USD 3.00 poverty line, and 2.35 per cent under the older USD 2.15 line – a dramatic decline from earlier decades.
In 2011-12, applying MMRP reduced India's poverty rate from 22.9 per cent to 16.22 per cent, even under the older USD 2.15 poverty line. In 2022-23, poverty under the new USD 3.00 line stood at 5.25 per cent, while under the older USD 2.15 line it dropped further to 2.35 per cent.
WHAT IS THE HOUSEHOLD CONSUMPTION SURVEY?
The Household Consumption Expenditure Survey (HCES) is designed to collect information on consumption and expenditure of the households on goods and services.
Here are the key highlights of the HCES for 2023-24:
Average Monthly Per Capita Expenditure (MPCE): In 2023-24, the average MPCE was Rs 4,122 in rural areas and Rs 6,996 in urban areas, excluding the value of items received free through social welfare programmes. When these are included, the figures rise to Rs 4,247 and Rs 7,078, respectively. This is a significant increase from the rural MPCE of Rs 1,430 and urban MPCE of Rs 2,630 in 2011-12
Urban-Rural Consumption Gap: The urban-rural consumption gap has narrowed from 84% in 2011-12 to 70% in 2023-24, indicating a reduction in consumption disparities between urban and rural households.
State-wise Trends: All 18 major states reported an increase in average MPCE for both rural and urban areas. Odisha experienced the highest rural increase (about 14%), while Punjab saw the highest urban increase (about 13%).
Consumption Inequality: The Gini coefficient, a measure of consumption inequality, decreased from 0.266 to 0.237 in rural areas and from 0.314 to 0.284 in urban areas between 2022-23 and 2023-24, suggesting a reduction in consumption inequality across most major states.
SO, HAS POVERTY IN INDIA REDUCED?
These findings complement the World Bank's revised figures, reinforcing the conclusion that poverty in India has reduced not just statistically, but through tangible improvements in household living standards and incomes.
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India's poverty decline is a story of technical refinement meeting policy results. In the face of a raised poverty benchmark, the country showed that more honest data, not diluted standards, can reveal real progress.
As the global community recalibrates poverty goals, India's example sets a precedent: evidence-based governance, sustained reforms, and methodological integrity can together deliver transformational outcomes.
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tags :
poverty world bank
Location :
New Delhi, India, India
First Published:
June 08, 2025, 17:38 IST
News explainers India Defies Global Poverty Trends Amid World Bank's Revised Estimates: What Does This Mean?