How India has travelled a long road out of poverty over the last 25 years
India has achieved significant poverty reduction since 2000, with millions lifted from extreme poverty due to economic growth and welfare schemes. Yet, considerable income and wealth inequality persist across society. Both rural and urban poverty have sharply declined, though debates continue regarding India's official poverty line and measurement methods amidst this progress.
New Delhi: As we draw the curtains on the first quarter of this century, it is important to examine how poverty in India has evolved since 2000. The 25-year period has been marked by galloping economic growth, shifts in policies, and a slew of welfare plans and initiatives. These have gone a long way in reshaping livelihoods, changing patterns in income, and transforming the way poverty is assessed and alleviated.
Poverty in India continues to pose challenge despite the march of the progress.
What do statistics say?
As per World Bank statistics, around 44–45% of India’s population lived in extreme poverty in 2000. According to India's official surveys around 36% of the population was below the poverty line. In 2004–05, around 27.5% of population was below national poverty line.
There was sharp reduction in poverty, especially after 2011. The World Bank has reported that the share of people living in extreme poverty in India dropped from 22.5% in 2011 to 10.2% in 2019. India has lifted 171 million people out of extreme poverty in the past one decade from 2015 to 2025, according to a World Bank report. The World Bank acknowledges India's decisive fight against poverty in its Spring 2025 Poverty and Equity Brief.
According to the World Bank report, the proportion of people living on less than $2.15 US dollars a day, which is the international yardstick for extreme poverty, fell sharply from 16.2% in 2011-12 to just 2.3% in 2022-23.
In 2025, just about 1% of India’s population is estimated to live below the poverty line of $2.15 a day (purchasing power parity -- PPP), according to World Poverty Clock data.
According to an RBI study, in 2023, the sharpest declines in the poverty headcount ratio were seen in rural areas of Himachal Pradesh, Karnataka, and Punjab, and in urban areas of Tamil Nadu, Karnataka, and Andhra Pradesh. Large population states such as Uttar Pradesh, Madhya Pradesh, and Bihar also recorded notable progress in alleviating poverty.
What about the inequality gap?
Even though there has been a marked decline in India’s poverty since 2000, income and wealth inequality continue to be high. In India, the top 10% are earning a disproportionately large share (55-57%) of the nation’s income, recent reports underlined. The bottom 50% earn only around 15%. The Gini coefficient, which measures inequality, has hovered around 35–37.
In states like Maharashtra and Karnataka, the inequality gap is bigger compared to poorer states like Bihar and Uttar Pradesh. Social inequality continues along caste, gender, and rural–urban divides.
Have both urban and rural poverty declined in India?
Both urban and rural landscape has seen a drop. In 2000, rural poverty was close to 50% and urban poverty about 35%. By 2011–12, rural poverty had fallen to around 26%, while urban poverty declined to about 14%. The downward trend has continued, with sharp reductions in extreme poverty across both areas.
The World Bank’s Poverty and Equity Brief for India (2025) found that the sharp reduction in extreme poverty has been broad-based, covering both rural and urban areas. In rural areas, extreme poverty dropped from 18.4% in 2011-12 to 2.8% in 2022-23. In urban centres, extreme poverty reduced from 10.7% to 1.1% over the same period, the study said.
What's the debate over benchmark to measure poverty?
The debate revolves around the pertinent question: where the poverty line should be drawn to identify who is poor in India? The older poverty lines are criticised for being set too low, which means many people with limited means are left out and not counted in the poor bracket.
International benchmarks like $2.15 a day help with comparisons across countries. However, they may not fully capture India’s actual living costs. Adding fuel to the debate is the fact that India has not announced an official national poverty line since 2011–12. In 2011-12, the poverty line was about Rs 27 per day in rural areas and Rs 33 per day in urban areas (at 2011–12 prices). Different studies rely on different methods resulting in widely varying poverty estimates.
What has brought down poverty rate in India?
The sharp decline in poverty post-2011 can be attributed to sustained economic growth and improved access to basic services. Government social welfare programmes — such as direct benefit transfers, the PM Garib Kalyan Anna Yojana, and subsidised access to education and healthcare — have played a key role in accelerating the decline in the poverty headcount ratio. Programmes like free food (PMGKAY), housing, healthcare (Ayushman Bharat), rural employment, and financial inclusion (Jan Dhan) were crucial in reducing poverty across the country.