India's poverty plunges, but richest 10 percent earn 13 times more than poorest: World Bank

The global financial institution said poverty reduction in India is expected to continue, although at a slower pace.

"Poverty is projected to continue declining, albeit more gradually, with the poverty rate at the $4.20/day line expected to fall from 14.2 per cent in 2026 to 12.1 per cent by 2028," the World Bank said in a statement.

It added that these indicative projections, based on microsimulations, would be updated as labour market and macroeconomic data are revised or new information becomes available.

On the non-monetary front, poverty also declined significantly. According to the Oxford Poverty and Human Development Initiative's (OPHI) Multidimensional Poverty Index (MPI), the poverty rate fell from 53.8 per cent in 2005–06 to 16.4 per cent in 2019–21. The World Bank's own MPI measure put the figure at 15.5 per cent in 2022–23.

The World Bank attributed the progress largely to strong consumption growth, rising employment, particularly among women, and expanded social transfers, including food subsidies.

However, as poverty declined, it became increasingly concentrated among households with lower levels of education, fewer assets, limited access to stable employment and higher dependency ratios, the bank observed.

Despite the substantial progress, wage disparities remain pronounced. Median earnings among the top 10 per cent of Indian workers were approximately 13 times higher than those of the bottom 10 per cent in 2023, according to the World Bank.

Commenting on India's poverty reduction journey, the institution said, "Spatially, India's poverty reduction story is one of both convergence and concentration."

Households in both rural and urban areas experienced significant improvements in living standards, with faster progress in rural India helping narrow the rural-urban gap.

However, many of the households still living in poverty remain concentrated in rural areas, where productivity is lower and access to better-quality non-farm employment opportunities is more limited.

Poverty has also become increasingly concentrated in specific geographical regions.

"While living standards improved across most states, households in a contiguous belt stretching from Uttar Pradesh to West Bengal account for about 57 per cent of India's poor population," the World Bank said.

The institution noted that further reductions in national poverty would increasingly depend on creating productive employment opportunities in these states.

Employment growth has also played a significant role in India's poverty reduction efforts. Between 2017 and 2023, employment increased by approximately 134 million people, nearly twice the growth in the working-age population.

Much of this increase was driven by rural women entering paid employment, thereby raising the number of income earners per household, the World Bank said.