For Prelims: Poverty and Equity Briefs (PEBs), International Monetary Fund (IMF), World Bank, Multidimensional Poverty, Gini Index. 

For Mains: Poverty in India- factors, related schemes and way forward. 

Why in News?

The World Bank’s Poverty and Equity Briefs (PEBs), released in April 2025, highlight a significant decline in extreme poverty in India.

According to the report, the share of India’s population living below the international extreme poverty line of USD 2.15 per person per day declined from 16.2% in 2011–12 to 2.3% in 2022–23. This represents an estimated 171 million people moving out of extreme poverty during this period.

What are Poverty and Equity Briefs (PEBs)?

• About: PEBs provide country-level information on poverty, inequality and shared prosperity across more than 100 developing economies.
• They are published twice a year, around the Spring and Annual Meetings of the World Bank and IMF.

Major Poverty Benchmarks

The World Bank examines poverty using both national poverty lines and international income thresholds:

• USD 2.15/day – International extreme poverty line
• USD 3.65/day – Lower-middle-income poverty line
• USD 6.85/day – Upper-middle-income poverty line

Data Used for India

For India, the World Bank’s estimates use consumption data from the 2011–12 Consumption Expenditure Survey and the 2022–23 Household Consumption Expenditure Survey.

Major Findings of the World Bank’s PEBs

1. Decline in Rural and Urban Extreme Poverty

Extreme poverty declined considerably between 2011–12 and 2022–23:

• Rural areas: 18.4% → 2.8%
• Urban areas: 10.7% → 1.1%

The rural-urban poverty gap consequently narrowed from 7.7 percentage points to 1.7 percentage points.

2. Poverty at the Lower-Middle-Income Line

At the USD 3.65/day threshold:

• Overall poverty declined from 61.8% to 28.1%.
• Around 378 million people moved above this poverty line.
• Rural poverty: 69% → 32.5%
• Urban poverty: 43.5% → 17.2%

3. Contribution of Major States

The five most populous states — Uttar Pradesh, Maharashtra, Bihar, West Bengal and Madhya Pradesh — accounted for about 65% of India’s extreme poor in 2011–12.

By 2022–23:

• These states contributed around two-thirds of the reduction in extreme poverty.
• However, they still accounted for approximately 54% of India’s extreme poor.

This highlights that poverty reduction has progressed substantially, but remains geographically concentrated.

4. Multidimensional Poverty

Poverty is not limited to income. The World Bank’s multidimensional assessment also considers education and access to basic services.

Non-monetary poverty declined:

53.8% (2005–06) → 16.4% (2019–21) → 15.5% (2022–23)

India’s consumption-based Gini index also declined from 28.8 in 2011–12 to 25.5 in 2022–23, indicating a reduction in measured consumption inequality.

Gini Index – Quick Revision

• 0 → Perfect equality
• 100 → Perfect inequality

The Gini coefficient measures the degree of inequality in the distribution of income or consumption.

Employment and Labour Market Trends

Poverty reduction is closely connected with employment and income opportunities.

• Urban unemployment declined to 6.6% in Q1 of FY 2024–25, according to the cited data.
• Rural women’s participation in agriculture has increased.
• Self-employment has become increasingly important, particularly among rural workers and women.
• The female employment rate remains considerably lower than that of men.
• Youth unemployment was reported at 13.3%, rising to around 29% among graduates in the cited data.
• Only around 23% of non-farm paid employment was formal, while agricultural employment remained predominantly informal.

Thus, reducing poverty requires not only higher incomes but also productive, secure and formal employment opportunities.

Major Factors Behind Poverty in India

1. Inequality

Unequal access to income, assets, education and opportunities can prevent vulnerable sections from benefiting equally from economic growth.

2. Social and Economic Exclusion

Women, marginalised communities and persons with disabilities may face barriers in education, employment, finance and public services.

3. Gender Inequality

Lower female labour-force participation, wage disparities and unequal access to economic resources can increase household and inter-generational poverty.

4. Youth Unemployment

Insufficient employment opportunities for young people can restrict income generation and delay economic independence.

According to the PLFS 2023–24, the unemployment rate for the 15–29 age group on usual status was 10.2%.

5. Inadequate Basic Infrastructure

Limited access to:

• Quality healthcare
• Education
• Safe drinking water
• Sanitation
• Housing
• Transport
• Digital connectivity

can reinforce the cycle of poverty.

Major Government Initiatives Related to Poverty Alleviation

Important schemes and programmes include:

• Deendayal Antyodaya Yojana–National Urban Livelihoods Mission (DAY-NULM)
• Pradhan Mantri Awas Yojana–Gramin (PMAY-G)
• Pradhan Mantri Garib Kalyan Yojana (PMGKY)
• Pradhan Mantri Suraksha Bima Yojana
• POSHAN Abhiyaan
• Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)

These programmes address different dimensions of poverty, including livelihoods, housing, social security, nutrition and employment.

Way Forward

1. Strengthen Women’s Economic Participation

Greater access to education, skills, credit, entrepreneurship and employment can improve women’s economic empowerment.

2. Promote Inclusive Growth

Development programmes should focus on vulnerable communities through better access to education, healthcare, financial services and social protection.

3. Expand Rural Employment and Skills

Skill-development initiatives such as PMKVY, combined with rural entrepreneurship and local employment generation, can improve livelihood opportunities.

4. Improve Basic Infrastructure

Greater investment in health, education, drinking water, sanitation, housing, transport and digital infrastructure can address the non-income dimensions of poverty.

5. Improve Poverty Measurement

Regular and comparable household surveys, improved data coverage and multidimensional indicators are important for designing evidence-based poverty policies.

Conclusion

India has recorded a substantial decline in both monetary and multidimensional poverty over the period highlighted by the World Bank.

However, poverty reduction should not be assessed only through income thresholds. Employment quality, regional disparities, gender gaps, access to basic services and inequality remain important dimensions of inclusive development.

For India, the next challenge is to ensure that poverty reduction is accompanied by productive employment, human-capital development and equitable access to opportunities.

UPSC Civil Services Examination – PYQs

Prelims

Q. The Multidimensional Poverty Index developed by the Oxford Poverty and Human Development Initiative with UNDP support covers which of the following? (2012)

1. Deprivation of education, health, assets and services at household level
2. Purchasing power parity at national level
3. Extent of budget deficit and GDP growth rate at national level

Select the correct answer:

(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (a)

Mains

Q1. Despite consistent experience of high growth, India still goes with the lowest indicators of human development. Examine the issues that make balanced and inclusive development elusive. (2016)

Q2. Professor Amartya Sen has advocated important reforms in the realms of primary education and primary health care. What are your suggestions to improve their status and performance? (2016)

Q3. Poverty and malnutrition create a vicious cycle, adversely affecting human capital formation. What steps can be taken to break the cycle? (2024)

GYANSHILA IAS – Exam Focus

For UPSC/BPSC: Link this topic with Poverty, Inclusive Growth, Human Development, Employment, Inequality, Social Justice, Government Schemes and Sustainable Development Goals (SDGs).

Keywords for Answer Writing:
Multidimensional Poverty • Inclusive Growth • Human Capital • Social Protection • Employment • Inequality • Financial Inclusion • Gender Equality • Regional Disparities