Is Poverty in India Really Down to 5% as Estimated by the World Bank?

The World Bank has revised its poverty estimates for India for 2022-23 at 5.3%, based on the international poverty line of USD 3.00 per day per capita (2021 PPP), up from 2.3% under the earlier USD 2.15 threshold (2017 PPP). 

This revision follows the adoption of the 2021 Purchasing Power Parity (PPP) by the International Comparison Programme (ICP). In Indian rupees terms, this would amount to about Rs 60 per day at 2021 PPP. For a household of 4.5 members, an income above Rs 8,100 per month would imply that the family is not classified as poor. This is a really low threshold.

However, the poverty around us is so rampant that the observed reality is at a large variance with the World Bank estimate of just about 5.3%. An important source of recent data on income comes from the Bihar Socio-Economic Caste Census, 2023. It found that approximately 34.1% of families in Bihar – 94.4 lakh out of 2.97 crore families – survive on less than Rs 6,000 per month, even lower than the World Bank’s extreme poverty line. Another 29.6% (81.9 lakh families) earn between Rs 6,000 and Rs 10,000 per month. 

If we roughly scale these figures to the Indian population, Bihar alone, with an average household size of 4.5, would account for nearly 3% of the population earning below Rs 6,000 per month and about 5.5% earning below Rs 10,000 per month.

Scholars differ in their estimates of poverty

Using the 2022-23 Household Consumption Expenditure Survey (HCES) data, many scholars have estimated a wide range of poverty figures for India. For instance, a paper by Sethu, Surya, and Ruthu (2024) estimated poverty at 26.4% for 2022-23 by recalculating poverty lines based on the Rangarajan Committee methodology. In contrast, Himanshu, Lanjouw, and Schirmer estimate poverty between 9.9% and 12.2% for 2022-23 using the Tendulkar and Rangarajan methodologies, respectively. These findings were also presented in a talk at India International Centre under the Mapping Sustainable Agriculture lecture series. Another estimate by Rangarajan and Dev (2024) places the poverty rate at 10.8% for the same year. 

Even before the release of the 2022-23 HCES, there was considerable divergence in poverty estimates for the period between 2011-12 and 2022-23 due to differences in data sources and estimation methodologies. For example, Mehrotra and Parida (2021), using data from the Periodic Labour Force Survey (PLFS), found that poverty increased from 21.9% to 25.9% between 2011-12 and 2019-20 based on the Tendulkar methodology. 

While all of these studies have projected a rise in poverty, relative to 2011-12, some other scholars have argued that poverty in India has been nearly eradicated. 

For instance, Bhalla, Virmani and Bhasin (2022) estimated India’s poverty rate at just 0.8% in 2019 using the World Bank’s USD 1.90/day poverty line – suggesting that the country may have already achieved UN Sustainable Development Goal (SDG) 1, which aims to eliminate extreme poverty by 2030.

India’s rate of poverty reduction may have slowed down

Another analysis of experts shows that India’s annual rate of poverty reduction may have slowed over time. 

The rate of poverty decline slowed from 2.8 percentage points per year between 2004-05 and 2011-12 to around 2 percentage points per year between 2011-12 and 2022-23, as per the World Bank estimates. This deceleration is closely linked to a slowdown in income growth.

India’s average annual GDP growth rate also declined over the past decade. Between 2004-05 and 2011-12, the economy grew at an average rate of 7% per annum, but growth slowed to 5.7% per annum between 2012-13 and 2022-23. 

Other data that show higher poverty

Poverty reduction is typically accompanied by structural transformation, however, there is a clear reversal of this trend, as the share of people engaged in agriculture has increased from 42.5% in 2018-19 to 46.1% in 2023-24 as per the PLFS data. 

The Union government had also set an ambitious target of doubling farmers’ income (DFI) by 2022-23, aiming to raise annual income for an agricultural household to Rs 1,72,694 by the end of the year. However, a study by Bathla et al. (2025) published as the India International Centre Policy Paper, estimated that agricultural household income in 2022-23 may have reached Rs 1,30,123 per annum at constant 2015-16 prices, indicating that actual income fell short of the target by approximately 25%.

Another direct implication of these poverty trends could be observed from wages.  Historically, poverty reduction has been accompanied by wage growth. However, a comparison of wage trends in rural areas – where a majority of the poor population resides – suggests a deceleration in real rural wage growth over the past decade. 

Data from the Wage Rates in Rural India (WRRI) published by the labour bureau show that real wages in farming operations grew at an annual rate of 3.1% between 2004-05 and 2011-12, but this growth slowed down to 2.8% between 2012-13 and 2022-23.

Beyond income-based poverty, the national Multidimensional Poverty Index (MPI) published by NITI Aayog found that poverty has declined significantly, from 29.17% in 2013-14 to 11.28% in 2022-23. In 2023, NITI Aayog incorporated two additional indicators apart from the Global MPI index – maternal health and bank account. The National MPI is now computed using 12 indicators across three dimensions: health (nutrition, maternal health, and child mortality), education (years of schooling and school attendance), and standard of living (access to cooking fuel, sanitation, drinking water, housing, electricity, bank accounts, and assets). 

When examining health indicators, particularly nutrition, the progress appears less encouraging. Between 2015-16 and 2019-21, the percentage of undernourished (stunted) children in India declined only marginally – from 38.4% to 35.5%.

Alarmingly, during this period, the prevalence of anemia has increased significantly among women (from 53% to 57%) and children (from 58.4% to 67.1%), signalling ongoing challenges in addressing nutritional poverty. 

The wide variation in poverty estimates underscores the urgent need by the Union government to set up an expert committee of independent and credible scholars to determine an official poverty line. 

This is especially important because the HCES 2022-23, with its revised survey methodology, recall periods, and sampling design, is not directly comparable to the 2011-12 survey which was used to estimate the Tendulkar Committee poverty lines. 

An accurate poverty line is essential to avoid exclusion and inclusion errors when identifying beneficiaries for various welfare schemes. If the current level of poverty is indeed below 5.3%, there may be a strong case for reducing the coverage under the National Food Security Act, 2013. 

Other welfare programmes may also require similar reassessment to ensure that national resources are directed toward those who truly need them.

Shyma Jose is an economist and Assistant Professor at Jesus and Mary College of Delhi University. Siraj Hussain is a former Union Agriculture Secretary.

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