India Defies Global Trend, Records Sharp Fall in Poverty Despite Higher World Bank Benchmark
In a landmark development, India has significantly reduced poverty levels despite the World Bank raising the global poverty benchmark from $2.15 to $3.00 per day. According to a government factsheet released on Saturday, India's revised data not only withstood the tougher standard but also helped reduce the global count of extreme poor by 125 million people.
The World Bank’s update, which uses 2021 purchasing power parity (PPP) instead of the earlier 2017 standard, has pushed millions into the poverty category globally. Yet, India emerged as a statistical outlier in a positive direction, reflecting what the government called “tangible improvements in household living standards and incomes.”
“India’s poverty decline is a story of technical refinement meeting policy results,” the factsheet stated.
World Bank’s New Line Raises Global Poverty Count — Except in India
Under the new $3/day line, the global extreme poor would have increased by 226 million people. However, thanks to India’s updated Household Consumption Expenditure Survey (HCES) data, which reflects more accurate consumption trends, the net increase globally was only 125 million — because India alone offset the figure by 125 million fewer poor.
This dramatic turnaround stems from India’s methodological upgrade. The National Sample Survey Office adopted the Modified Mixed Recall Period (MMRP) method, which uses shorter recall periods for frequently purchased items to better capture actual consumption behavior. The previous Uniform Recall Period (URP) was outdated and underestimated daily living realities.
What the Numbers Say: A Deep Dive
- In 2011–12, using MMRP, India's poverty rate was recalculated from 22.9% to 16.22% under the $2.15 line.
- In 2022–23, poverty stood at 5.25% under the new $3 line, and just 2.35% under the old $2.15 line.
This sharp decline is backed by rising household spending:
- The Monthly Per Capita Expenditure (MPCE) in 2023–24 was:
- ₹4,122 in rural areas (₹4,247 including freebies)
- ₹6,996 in urban areas (₹7,078 including freebies)
This marks a near tripling from the ₹1,430 (rural) and ₹2,630 (urban) MPCE levels in 2011–12.
Reducing the Urban-Rural Divide
The urban-rural consumption gap, once at 84%, has narrowed to 70%, reflecting greater parity in economic well-being across the country.
All 18 major states recorded an increase in average MPCE:
- Odisha saw the highest rural MPCE growth at ~14%
- Punjab reported the highest urban MPCE growth at ~13%
Inequality Also Falls
Alongside reduced poverty, income inequality also dipped. The Gini coefficient, a key indicator of inequality:
- Rural India: dropped from 0.266 to 0.237
- Urban India: fell from 0.314 to 0.284
These numbers suggest a more equitable distribution of consumption, driven by both income growth and government welfare schemes.
A Model for the Global South?
The factsheet emphasizes that India's progress is not just statistical—it’s real and replicable. By adopting evidence-based governance, robust social welfare programs, and transparent survey practices, India sets a model for other developing countries facing data and development challenges.
“India’s example sets a precedent: evidence-based governance, sustained reforms, and methodological integrity can together deliver transformational outcomes,” the factsheet read.
Why This Matters
The global community is now watching India as a case study in accurate poverty measurement and delivery-focused governance. At a time when most nations are revising poverty figures upward, India’s ability to show downward movement — and do so credibly — is being lauded by economists and policymakers.
India’s poverty reduction story reflects not just improved economic metrics, but also an evolution in data credibility, state capacity, and public welfare effectiveness. As the global poverty narrative resets under new World Bank norms, India is leading the way not by shifting the goalposts—but by running faster toward them.