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A recent World Bank (WB) report, titled World Bank’s Spring 2025 Poverty and Equity Brief, highlights India’s substantial progress in reducing poverty. According to the report, extreme poverty in India declined from 16.2% in 2011–12 to just 2.3% in 2022–23. This means that 171 million people have been lifted above the poverty line. Rural extreme poverty fell from 18.4% to 2.8%, while urban poverty decreased from 10.7% to 1.1%. Consequently, the rural-urban poverty gap has narrowed significantly, dropping from 7.7% to 1.7%. This represents an annual decline of 16%, according to the report.

The Poverty and Equity Briefs (PEB) from the World Bank track trends in poverty, shared prosperity, and equality across more than 100 developing countries.

What Defines Poverty?

The World Bank defines extreme poverty as living on less than $2.15 per day, based on purchasing power parity (PPP). This international benchmark adjusts for differences in price levels between countries, rather than using domestic currency exchange rates. Currently, on a PPP basis, $1 is equivalent to about ₹22 in India, meaning that individuals living on less than approximately ₹46 per day are considered extremely poor.

Additionally, the World Bank uses $3.65 per day as the benchmark for the lower-middle-income group and $6.85 for the upper-middle-income group. Based on the $3.65 threshold, India has also transitioned into the lower-middle-income category. At this level, poverty in India has declined from 61.8% to 28.1% over the past decade, lifting approximately 371 million people out of poverty. The rural-urban gap, on this basis, has narrowed from 25% to 15%, reflecting an annual reduction of 7%.

The report also notes that five of India’s most populous states—Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh—accounted for 65% of the country’s extreme poverty in 2011–12. These states continued to contribute to two-thirds of the overall decline in extreme poverty by 2022–23.

Strategies for Reducing Actual Poverty and India’s Policy Approach

It is widely accepted that poverty extends beyond low income. It encompasses hunger, malnutrition, lack of access to education and basic services, social discrimination, and exclusion from decision-making processes. People living below the poverty line often struggle to meet even their most basic needs.

To effectively reduce poverty, the focus must be on inclusive growth. Economic development must benefit all sections of society, particularly the poor and marginalized. Physical Infrastructure Development

Agricultural development needs to be accelerated, with investments in infrastructure, credit availability, and technology. Farmers must also receive training to adopt new technologies efficiently. Simultaneously, non-farm activities must be promoted, especially in rural areas, where their importance is rapidly increasing. Without developing this sector, rural economies will remain underdeveloped.

Investment in infrastructure such as roads, transportation, and communication networks is essential. Improved infrastructure reduces regional disparities and generates large-scale employ-ment, thereby raising incomes.

Human Capital Development

Human capital formation is equally critical. Access to free, quality education must be a priority, as disparities in education levels are a major cause of income inequality worldwide. Quality primary education is particularly vital.

Access to affordable and quality healthcare must be ensured for all, with a strong focus on preventive care. Healthier populations are more productive and better able to lift themselves out of poverty.

Skill development programs are crucial. Countries like China and Germany have demonstrated how vocational training, starting from school levels, can contribute significantly to poverty reduction.

Social Protection and Asset Creation

Strengthening the public distribution system is essential for broader development. Financial inclusion should be promoted by integrating everyone into the formal banking and financial services sectors. Common people should also be encouraged to acquire productive assets such as land, livestock, and tools.

Special emphasis must be placed on empowering women, as gender equality does not happen automatically. Protecting vulnerable groups from natural disasters and social discrimination is equally important. Ultimately, all of these initiatives depend on good governance and transparency, which are the foundation for achieving sustainable poverty reduction.