Rajesh Shukla: The World Bank's estimates show India is escaping poverty -- but are the people becoming economically secure

Summary

The World Bank's findings should neither be dismissed because inequality persists nor interpreted as proof that India's development challenges have been resolved. The goal should be to ensure that people who exit poverty continue to prosper.

India's latest poverty estimates have sparked a wider debate about the country's economic progress. The World Bank's findings are seen by some as evidence of remarkable achievement in poverty reduction, while others question how these gains coexist with persistent inequalities.

A closer examination of the evidence reveals a more nuanced story. India has made substantial progress in reducing deprivation, but the distance between escaping poverty and achieving lasting economic security remains considerable.

The World Bank's October 2026 Poverty & Equity Brief estimates that extreme poverty, measured at $3 per person per day in 2021 purchasing power parity (PPP) terms, declined from 27.1% in 2011 to 2.6% in 2023.

At the higher $4.20 threshold, poverty fell from 57.7% to 16.1%, lifting an estimated 496 million people above that line. These achievements reflect economic growth, expanding employment and social protection programmes.

But another figure in the same report changes the perspective. At $8.30 per day, the international poverty benchmark for upper middle income countries, about 80% of Indians remain below the threshold.

These figures are not contradictory. They represent different standards of consumption. India has substantially reduced extreme deprivation, but the journey towards broadly shared prosperity remains incomplete.

This distinction is frequently lost in public debate. Poverty reduction measures movement above a specified minimum standard of living. Inequality describes how economic resources are distributed.

Economic security is more demanding: the capacity to sustain living standards, withstand unexpected shocks and invest in a better future. A household may escape poverty without acquiring the stable income or financial reserves needed to remain above it.

The World Bank's findings illustrate this challenge. Between 2017 and 2023, India's employment increased by about 134 million people, nearly twice the increase in its working age population. Much of this expansion came from rural women entering paid employment. Yet, real earnings were broadly unchanged, with employment growth concentrated in relatively low productivity activities.

More people working is encouraging, but employment quality and remuneration ultimately determine whether households achieve lasting economic advancement.

Understanding this transition requires examining something India has historically measured less systematically than consumption: household income. The National Statistics Office's consumption surveys provide the principal foundation for the World Bank's poverty estimates.

They offer indispensable evidence about living standards but cannot independently establish how households earn their livelihoods or whether their financial position is improving.

India's absence of a regular official household income series is, therefore, a significant statistical gap. The National Council of Applied Economic Research pioneered household income surveys, while People Research on India's Consumer Economy (PRICE), through its ICE 360° programme, continued these by collecting detailed evidence on household earnings, expenditure and savings.

These surveys provide a complementary perspective. Household income inequality, measured by the Gini coefficient, declined from 0.475 in 2004-05 to 0.395 in 2015-16, rose sharply to 0.528 during the pandemic and moderated to 0.410 in 2022-23.

This trajectory reveals longer-term improvement, severe disruption during covid and subsequent recovery. It also illustrates why conclusions about inequality depend on the period examined and the economic variable measured.

The World Bank's consumption Gini index of 23 for 2023 appears considerably lower than PRICE's household income Gini of 0.410 for 2022-23, equivalent to 41 on the same numerical scale. But the estimates measure different distributions, using different surveys and reference periods.

Consumption is generally more evenly distributed than income because households smooth expenditure through savings, borrowing, remittances and public transfers. Comparing these figures without recognizing their differences creates apparent contradictions where none necessarily exist.

Importantly, the World Bank acknowledges limitations in its estimates. It notes that substantial welfare gains between the 2022-23 and 2023-24 consumption surveys may reflect both genuine improvements and better measurement. It also cautions that surveys may inadequately capture affluent consumption, potentially understating inequality. Such transparency should encourage careful interpretation rather than diminish confidence in the findings.

Geography adds another dimension. Around 57% of India's remaining poor are concentrated in a belt stretching from Uttar Pradesh to West Bengal. Although poverty has declined across much of the country, future progress increasingly depends on raising productivity, improving employment quality and expanding income opportunities in regions where deprivation remains concentrated.

India's next development challenge is, therefore, not simply to move more people above a poverty threshold, but ensuring that those who cross it continue moving upwards. Food subsidies and public transfers protect consumption, particularly among vulnerable households. Lasting advancement, however, depends on productive employment, rising real earnings, financial resilience and opportunities for mobility.

The World Bank's findings should neither be dismissed because inequality persists nor interpreted as proof that India's development challenges have been resolved. Both positions overlook the complexity of economic transformation.

The next chapter of India's development story should be judged not merely by how many people cross the poverty line, but by how securely they remain above it and how far they can rise beyond it.

The author is managing director and chief executive officer of People Research on India's Consumer Economy.