How Did India Lift 171 Million People Out of Poverty in 10 Years? The Surprising Facts Revealed

In recent years, India has made remarkable strides in economic development, lifting millions of its citizens out of poverty and improving overall living standards. According to the latest report by the World Bank, India has successfully lifted 171 million people out of extreme poverty between 2011-12 and 2022-23. This achievement marks a significant milestone in the country’s ongoing efforts to combat poverty and promote inclusive growth.

The World Bank’s “Poverty & Equity Brief” highlights that the proportion of people living on less than USD 2.15 a day (extreme poverty) in India fell dramatically from 16.2% in 2011-12 to just 2.3% in 2022-23. This is a powerful testament to India’s ability to address the challenges of poverty. Notably, rural areas, which have traditionally struggled with high poverty levels, saw extreme poverty drop from 18.4% to 2.8%. Urban areas experienced similar progress, with extreme poverty falling from 10.7% to 1.1%.

This reduction in extreme poverty not only highlights the success of government policies but also underscores the country’s rapid economic transformation. The gap between rural and urban poverty has narrowed significantly, reflecting a more balanced economic development across the country. India’s progress has been substantial, with the country now poised to join the ranks of lower-middle-income nations.

India’s Transition to Lower-Middle-Income Status

The World Bank’s report also reveals that India has moved into the category of lower-middle-income countries. This shift signifies the country’s growing economic resilience. By using the $3.65 per day poverty line for lower-middle-income nations, the report shows that poverty in India dropped from 61.8% to 28.1% between 2011-12 and 2022-23, lifting 378 million people above the poverty line. The report further highlights the significant progress in rural poverty reduction, with the rural poverty rate falling from 69% to 32.5%, and urban poverty dropping from 43.5% to 17.2%.

India’s poverty reduction efforts have been driven by the performance of its most populous states. Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh, which were home to 65% of India’s extreme poor in 2011-12, contributed significantly to the reduction in extreme poverty. By 2022-23, these states were responsible for two-thirds of the decline in extreme poverty. Despite their successes, these states still account for a large portion of India’s extreme poor, highlighting the ongoing need for targeted interventions to address regional disparities.

Multidimensional Poverty Reduction: A Comprehensive Approach

India’s efforts to reduce poverty go beyond just monetary measures. The World Bank also highlights the decline in India’s Multidimensional Poverty Index (MPI), which measures the non-monetary aspects of poverty. From 2005-06 to 2019-21, India’s MPI dropped from 53.8% to 16.4%, indicating improvements in factors such as health, education, and living standards. This comprehensive approach to poverty reduction is crucial for creating long-term, sustainable development.

Alongside poverty reduction, India has seen positive trends in employment. The World Bank reports that employment growth has outpaced the increase in the working-age population since 2021-22. Notably, urban unemployment has fallen to 6.6% in Q1 FY24/25, the lowest level since 2017-18. Women, in particular, have experienced increased employment opportunities. There has also been a notable shift in male workers from rural to urban areas, marking a new phase in India’s labor market dynamics.

However, challenges persist. Youth unemployment remains high at 13.3%, with tertiary education graduates facing a particularly tough job market, as the rate for this group stands at 29%. Despite these challenges, India’s overall employment growth remains an encouraging sign of the country’s economic dynamism.

Despite these positive developments, India faces ongoing challenges in maintaining its economic momentum. The World Bank and other international agencies have revised India’s economic growth forecast for FY 2025-26, with the GDP growth projection now standing at 6.3%. This is down from previous forecasts of 6.7% and reflects global economic slowdowns and the impact of policy uncertainties on private investment. The Reserve Bank of India (RBI) and international organizations like the IMF and Moody’s have similarly adjusted their growth forecasts, signaling the need for sustained reforms and innovation.

India’s economic resilience is being tested by these external challenges, but the country’s success in poverty reduction and employment growth provides a solid foundation for tackling these obstacles. Continued efforts to foster innovation, improve infrastructure, and enhance the ease of doing business will be crucial in ensuring that India remains on a path of sustainable growth.

As India moves forward, its focus on poverty reduction, employment growth, and infrastructure development remains central to its strategy. The government’s initiatives to expand access to education, healthcare, and financial services, coupled with efforts to promote inclusive growth, are helping millions of people rise above poverty.

With a growing middle class and an increasingly dynamic economy, India has the potential to continue driving global growth. By addressing regional disparities, investing in human capital, and maintaining its focus on inclusive development, India can secure its place as a leading economic power in the 21st century. The country’s journey from extreme poverty to economic progress serves as an inspiration to the world, demonstrating the power of policy, innovation, and determination in transforming a nation’s future.

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