Why in the News?
According to a new World Bank report, extreme poverty in India has fallen from 27.1% in 2011–12 to just 5.3% in 2022–23, based on a revised international poverty line.
Understanding World Bank’s Poverty Lines:
- The World Bank defines extreme poverty as living on less than a fixed amount per person per day, adjusted using Purchasing Power Parity (PPP) to account for inflation and cost of living.
- PPP compares currencies by showing how much money is needed in different countries to buy the same goods. It helps measure real cost of living and economic strength.
- Previous thresholds:
- $1.90 per day (2011 PPP)
- $2.15 per day (2017 PPP)
- Revised in June 2025:
- Low-income countries: $3 per day
- Lower middle-income countries (LMIC): $4.20 per day (up from $3.65)
- Upper middle-income countries: $8.40 per day (up from $6.85)
- Why it matters: These new thresholds help track progress in poverty reduction and align better with today’s economic conditions.
India’s Progress and Challenges:
- Reduction in Poverty:
- At the $3/day level, poverty dropped from 27.1% (2011–12) to 5.3% (2022–23).
- At the $2.15/day level, poverty fell from 16.2% to 2.3%, lifting 171 million people.
- At the $4.20/day level, poverty declined from 61.8% to 28.1%, benefiting 378 million people.
- Rural-Urban Trends:
- Rural poverty dropped from 69% to 32.5%, and urban poverty from 43.5% to 17.2%.
- The rural-urban gap narrowed from 25 to 15 percentage points.
- Inequality Measures:
- Consumption inequality improved (Gini fell from 28.8 to 25.5).
- Income inequality, however, worsened (Gini rose from 52 to 62).
- Employment Trends:
- Since 2021–22, employment growth has outpaced the working-age population.
- Urban unemployment dropped to 6.6%, the lowest since 2017–18, but youth unemployment remains high at 13.3%, and 29% among graduates.
- State-Level Dynamics:
- UP, Maharashtra, Bihar, West Bengal, and MP contributed to 65% of the extreme poor (2011–12) and now represent 54% of the remaining poor.
- Multidimensional Poverty:
- Declined significantly from 53.8% in 2005–06 to 15.5% in 2022–23, reflecting progress in health, education, and living standards.
| [UPSC 2019] In a given year in India, official poverty lines are higher in some States than in others because:
Options: (a) poverty rates vary from State to State (b) price levels vary from State to State* (c) Gross State Product varies from State to State (d) quality of public distribution varies from State to State |
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