Current Affairs · · GS3 · Economy

World Bank says India's extreme poverty fell to 2.6% by 2023

The World Bank's October 2026 Poverty and Equity Brief says India's extreme poverty, at $3 a day, fell from 27.1% in 2011 to 2.6% in 2023. At the $4.20 line for lower-middle-income countries, poverty fell from 57.7% to 16.1%, lifting about 496 million people. It flags inequality, youth unemployment and regional gaps as continuing challenges.

Event date:

REq1
  1. Note1 / 5

    WHY IN NEWS?

    • The World Bank's October 2026 Poverty and Equity Brief for India reports sharp falls in poverty between 2011 and 2023.
    • Extreme poverty ($3 a day): 27.1% to 2.6%.
    • Lower-middle-income poverty ($4.20 a day): 57.7% to 16.1%, about 496 million people lifted.
    • It projects the $4.20 rate to fall further, from 14.2% in 2026 to 12.1% in 2028, at a slower pace.
    • It highlights inequality, youth unemployment and the concentration of poverty in a few States.
  2. Note2 / 5

    THE THREE POVERTY LINES

    Poverty line (2021 PPP, per person per day)Applies toIndia 2011India 2023
    $3.00Extreme poverty27.1%2.6%
    $4.20Lower-middle-income countries57.7%16.1%
    $8.30Upper-middle-income countries––

    India is classified as a lower-middle-income country, so the $4.20 line is considered more relevant.

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    KEY CONCEPTS

    1. What is purchasing power parity?

    PPP converts currencies by what they can buy locally, not by market exchange rates. It allows fair comparison of living standards across countries.

    1. What is the Multidimensional Poverty Index?

    It measures deprivations in health, education and living standards, not just income. NITI Aayog estimated about 24.8 crore people escaped multidimensional poverty between 2013-14 and 2022-23.

    1. What is HCES?

    The Household Consumption Expenditure Survey measures what families spend. In 2023-24, average monthly per capita spending was about ₹4,122 in rural and ₹6,996 in urban India.

    1. Why do estimates change between reports?

    New surveys, revised price data and updated methods can shift numbers, so figures from different reports should not be compared directly.

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    DRIVERS AND GAPS

    This card sets out documented positions. It does not adjudicate between them.

    • Drivers: Rising consumption, free food grains for about 81 crore people, more rural women in paid work, direct benefit transfers, and housing, sanitation and water schemes.
    • Inequality: Earnings at the top remain many times those at the bottom.
    • Jobs: Youth unemployment and informal work remain high.
    • Nutrition: NFHS-5 found 35.5% of children under five stunted.
    • Gender: Women's labour force participation, at about 40%, is half that of men.
    • Regions: Poverty remains concentrated in a few large eastern and northern States.
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    WAY FORWARD

    These are suggested measures, not approved policy.

    • Create jobs in labour-intensive sectors such as textiles, food processing and tourism.
    • Match skills to demand through vocational training.
    • Support women's work with childcare and safe transport.
    • Target lagging regions through aspirational district and block programmes.
    • Invest in nutrition and schooling to break poverty across generations.
    • Strengthen social security, including portable ration cards, health cover and rural employment guarantees.

Sources

Syllabus

PaperSubjectSub-topic
GS3EconomyPoverty, inclusive growth, employment
GS2Social JusticeWelfare schemes
PrelimsEconomyInternational poverty lines, MPI, HCES, World Bank reports

Topics

Economic GrowthHuman Development and Sustainable DevelopmentImportant Economic Concepts

Related previous-year questions

Asked in earlier UPSC Prelims papers on this topic. Answer, then check.

  1. UPSC Prelims 2026 · Indian Economy · Important Indexes and Reports

    Consider the following statements about Multidimensional Poverty Index (MPI): 1. MPI is calculated using Alkire-Foster methodology. 2. MPI calculated by NITI Aayog has a total of twelve indicators. 3. Maternal Health and Bank Account are common indicators in the MPI of NITI Aayog and MPI of United Nations Development Programme (UNDP). Which of the statements given above is/are correct?

    1. 1 and 2 only
    2. 1, 2 and 3
    3. 1 and 3 only
    4. 2 only
    Show answer

    Answer: A. The Multidimensional Poverty Index (MPI) is computed using the Alkire-Foster methodology, developed by Sabina Alkire and James Foster at the Oxford Poverty and Human Development Initiative. NITI Aayog's National MPI uses 12 indicators under three dimensions - Health, Education, and Standard of Living. Although it broadly follows the structure of the Global MPI, it incorporates modifications tailored to India's context. The Global MPI, published jointly by the United Nations Development Programme and the Oxford Poverty and Human Development Initiative, employs 10 indicators across the same three dimensions. Statement 1 is correct: Both the Global MPI (UNDP-OPHI) and NITI Aayog's National MPI use the Alkire-Foster approach for identifying and measuring multidimensional poverty. Statement 2 is correct: NITI Aayog's National MPI includes 12 indicators distributed across Health, Education, and Standard of Living, exceeding the 10 indicators used in the Global MPI. Statement 3 is incorrect: The Bank Account indicator is unique to NITI Aayog's framework and is not included in the Global MPI. Similarly, Maternal Health (ANC) is specific to NITI Aayog's methodology and is absent from the UNDP framework, which instead incorporates Nutrition measures. These indicators are therefore not shared by both frameworks. Statements 1 and 2 are correct, so the answer is Option (a).

    Difficulty: medium · statement

    Open this question on its own page, with the full explanation →

Practice questions

  1. The World Bank's international extreme poverty line, in 2021 PPP terms, is:

    1. $1.90 a day
    2. $2.15 a day
    3. $3.00 a day
    4. $4.20 a day
    Show answer

    Answer: C. It was raised from $2.15 in 2025.

    Difficulty: medium · statement

  2. Which poverty line does the World Bank consider most relevant for India as a lower-middle-income country?

    1. $3.00
    2. $4.20
    3. $8.30
    4. $1.90
    Show answer

    Answer: B. It is the median of national poverty lines of lower-middle-income countries.

    Difficulty: medium · statement

  3. Purchasing power parity is used in poverty measurement to:

    1. Convert currencies at market exchange rates
    2. Compare living standards by what money can buy locally
    3. Measure inflation only
    4. Calculate tax revenue
    Show answer

    Answer: B. It adjusts for price differences across countries.

    Difficulty: medium · statement

Mains practice

Answer-writing practice on this article. Attempt it first, then open the hints.

  1. GS3 · 250 words

    India has sharply reduced poverty, yet inequality and joblessness persist. Discuss the drivers of poverty reduction and the challenges ahead.

    Show hints
    1. Consumption growth, food security
    2. DBT, women's work
    3. inequality, informal jobs
    4. nutrition
    5. regional gaps.