The World Bank has projected India’s poverty rate at the $4.2-a-day threshold to decline from an estimated 14.2 per cent in 2026 to 12.1 per cent by 2028, although the pace of reduction is expected to moderate.
India’s poverty rate fell sharply over the past decade, with the share of the population living below the lower-middle-income poverty line declining from 57.7 per cent in 2011 to 16.1 per cent in 2023, lifting an estimated 496 million people out of poverty, according to its October 2026 Poverty and Equity Brief.
Extreme poverty, measured using the international poverty line of $3 a day in purchasing power parity terms, also declined from 27.1 per cent in 2011 to 2.6 per cent in 2023. However, poverty remains widespread when measured against higher income thresholds. About 80 per cent of India’s population lived below the upper-middle-income poverty line of $8.3 a day in 2023, the brief observed.
The Bank said poverty reduction was driven primarily by strong consumption growth, rising employment, particularly among women, and expanded social transfers, including food subsidies.
Despite these gains, poverty remains concentrated among rural households and in a belt of states stretching from Uttar Pradesh to West Bengal, which accounted for about 57 per cent of the country’s poor population. The poverty rate stood at 19.3 per cent in rural areas, compared with 8.6 per cent in urban areas in 2023.
“Primarily, two factors have contributed to the reduction in poverty. First, the emergence of ecommerce and quick-commerce services has led to widespread job creation, although much of the work is low-skilled. Second, social transfers and free food for people have increased significantly, leaving households with more money for non-food consumption,” said Madan Sabnavis, chief economist at Bank of Baroda.
The report said that India’s employment expanded by about 134 million people between 2017 and 2023, nearly twice the increase in the working-age population. Much of the growth was driven by rural women entering paid work, increasing the number of earners per household.
However, these employment gains have not translated into marked improvements in real earnings, which remained broadly unchanged, as job creation was concentrated in relatively low-productivity activities, the report said. Youth unemployment also increased from 14.6 per cent in the first quarter (April-June/Q1) of 2025-26 to 15.9 per cent in the corresponding quarter of 2026-27, particularly among rural young women.
“The only way to continue reducing poverty sustainably is to create more jobs. When people do not have jobs, cash transfers will have to continue, and how far that is financially feasible remains to be seen. As soon as cash transfers are stopped for these people, they would slide back into poverty,” Sabnavis added.
The Bank cautioned that the latest poverty estimates may reflect both genuine improvements in living standards and changes in measurement. It also said that the surveys may understate inequality by failing to fully capture consumption among wealthier households.
