WORLD BANK INDIA POVERTY AND EQUITY BRIEF 2026 EXPLAINED

Why In News?

The World Bank’s India Poverty and Equity Brief highlights decline in poverty across India between 2011 and 2023, driven by consumption growth, job creation, and expanded social welfare schemes.

What Are The Key Findings Of The India Poverty And Equity Brief?

Sharp Fall In Poverty

• 496 Million Lifted Out: Between 2011 and 2023, the share of people below the lower-middle-income poverty line of USD 4.20 a day fell from 57.7% to 16.1%. This lifted an estimated 496 million people out of poverty.

• Extreme Poverty Collapse: Extreme poverty, measured at USD 3.00 a day, fell from 27.1% to 2.6%, leaving about 75.2 million people in extreme poverty in 2023.

• Slower Decline Ahead: Poverty at the USD 4.20 line is projected to fall more slowly, from 14.2% in 2026 to 12.1% by 2028.

Non-Monetary Gains

• Oxford Poverty and Human Development Initiative (OPHI) Estimate: The Multidimensional Poverty Index (MPI) rate fell from 53.8% in 2005–06 to 16.4% in 2019–21.

• World Bank Estimate: The World Bank's own MPI estimate stood at 15.5% in 2022–23.

Where The Poor Remain

• Eastern Belt: A belt of states from Uttar Pradesh to West Bengal holds about 57% of India's remaining poor.

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• Rural–Urban Gap: Rural poverty stands at 19.3%, compared with 8.6% in urban areas, mainly because of scarce non-farm jobs and low farm productivity.

Who Is Most Vulnerable

• Children And Women: Poverty is highest among children aged 0–14 (21.8%), followed by females (16.6%).

• Education Divide: Poverty affects 21.3% of people with no education, but only 7.4% of those with tertiary education.

• Wage Inequality: The median earnings of the top 10% of workers are 13 times those of the bottom 10%. The Gini index stands at 23.0 (2023).

What Drove The Decline

• Growth And Jobs: Strong domestic consumption, rising employment, especially among rural women, and expanded social transfers such as food subsidies drove the progress.

What Is Poverty And How Is It Measured?

Concept Of Poverty

• World Bank Definition: Poverty is a pronounced deprivation in well-being, where people lack enough income or consumption to meet a minimum standard of living.

• Beyond Income: Poverty also includes poor access to food, healthcare, education and housing, along with a lack of dignity, empowerment and political voice.

• Absolute Poverty: This means lacking the money to afford a socially accepted minimum consumption basket.

• Relative Poverty: This means having significantly less income than the average or median in society. It highlights inequality even when basic needs are met.

How Monetary Poverty Is Calculated

• Three Steps: Measurement involves setting a poverty line, choosing a welfare measure such as income or consumption, and calculating the share of people below that line.

Poverty Estimation In India

• Institutional Framework: NITI Aayog oversees poverty estimation using household consumption data from the National Sample Survey Office (NSSO) under MoSPI. The Ministry of Rural Development runs the BPL Census to identify poor households for welfare schemes.

• Early Committees: The Planning Commission began official estimates in 1962. The Alagh Committee (1979) and Lakdawala Committee (1993) refined methods using consumption and calorie norms.

• Tendulkar Committee (2009): It moved away from calorie norms and adopted a uniform Poverty Line Basket. It set the 2011–12 poverty line at ₹816 (rural) and ₹1,000 (urban) per person per month.

• Rangarajan Committee (2014): It recommended separate rural and urban baskets, with lines of ₹972 (rural) and ₹1,407 (urban). The government did not formally adopt its recommendations.

  

Challenges Hindering Poverty Reduction In India 

Inequality And Jobs

• Wealth Concentration: Rising concentration of wealth weakens the constitutional goal under Article 39(c), which directs the State to prevent the concentration of wealth to the common detriment.

• Example: The World Inequality Lab (2024) estimated that India's top 1% holds over 40% of national wealth, which shows how unevenly the gains of growth are shared.

• Informal And Insecure Work: Over 80% of the workforce lacks formal job security and social protection, so one health or economic shock can push families back into poverty.

• Weak Job Creation: Capital-intensive growth does not absorb enough surplus farm labour.

• Example: The ILO's India Employment Report (2024) found that youth make up about 83% of India's unemployed, which keeps many young people out of productive jobs.

Agrarian And Social Traps

• Low Farm Productivity: Agriculture employs about 45% of the workforce but contributes only about 18% of GDP. Small landholdings, erratic monsoons and price swings trap farmers in debt.

• Caste And Tribal Exclusion: Historical land alienation and displacement keep many SC and ST households from building assets across generations.

• Example: The Xaxa Committee (2014) documented how displacement and land alienation have kept Scheduled Tribes among the poorest groups in India.

• Women's Exclusion: Heavy unpaid care work and low-paid farm labour limit women's earnings and financial independence.

Health, Nutrition And Climate Shocks

• Hidden Hunger: Micronutrient deficiencies harm children's growth and future earning capacity, even when calorie intake is adequate.

• Example: NFHS-5 found that over half of women in India are anaemic, while child stunting remains high, which limits the productivity of the next generation.

• Catastrophic Health Spending: Out-of-pocket expenditure makes up about 47–48% of total health spending.

• Example: High medical costs are estimated to push about 55 million Indians into poverty every year.

• Climate Shocks: Floods and heatwaves repeatedly destroy the assets, livestock and homes of marginal farmers and slum dwellers, resetting their progress.

Long-Term Pressures

• Low Human Capital Spending: Public spending of about 1.3% of GDP on health and 2.9% on education leaves much of the workforce under-skilled. (Source: Economic Survey)

• Food Inflation: Volatile food prices erode the real incomes of poor households and cancel out wage gains.

• Ageing Without Pensions: More than 20% of India's population will be elderly by 2050. Without universal pensions, poor families will bear rising care costs. (Source: UNFPA)

Measures For Poverty Reduction In India 

Employment And Skills

• Link Rural Jobs With Skilling: Rural employment schemes such as VB-G RAM G should be integrated with PM Kaushal Vikas Yojana to build skills and climate-resilient assets.

• Employment-Linked Incentives: Subsidising formal hiring in labour-intensive sectors such as textiles, toys and food processing can create mass jobs.

• Vocational Education: The NEP 2020 target of exposing 100% of learners to vocational education by 2030 can close the skills gap.

Empowering Women And The Marginalised

• Market Access For SHGs: Linking Self-Help Groups to the Open Network for Digital Commerce (ONDC) can cut out middlemen and widen markets.

• Example: The government's Lakhpati Didi initiative aims to help 3 crore SHG women earn at least ₹1 lakh a year, turning micro-credit into sustainable livelihoods.

• Childcare Support: Rolling out the planned 17,000 creches under the National Creche Scheme would free women from unpaid care work and raise female workforce participation.

• Disability Inclusion: Strictly enforcing the 4% job reservation under the RPwD Act, 2016 can improve the economic participation of persons with disabilities.

Social Protection For New Workers

• Gig Worker Security: The Code on Social Security, 2020 can be strengthened with a small cess on platform revenues to fund health and pension cover for gig workers.

• Example: The Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, 2023 created a welfare fund financed by a fee on platform transactions, offering a model for other states.

• Nutrition-Centric PDS: Adding pulses, edible oils and fortified millets to the Targeted Public Distribution System can fight anaemia and stunting.

• Community Eldercare: Under the National Programme for Health Care of the Elderly (NPHCE), community day-care and home-based palliative care can reduce wage losses for working family members.

Agriculture, Fiscal Equity And Resilience

• Digital Farm Credit: Universal Kisan IDs linked to land records can enable collateral-free credit through the Kisan Credit Card, reducing dependence on moneylenders.

• Crop Diversification: Shifting incentives from water-intensive paddy and wheat towards millets (Shree Anna) and pulses can stabilise incomes for dryland farmers.

• Progressive Taxation: Stronger progressive direct taxes can curb wealth concentration and fund higher public health spending, in line with the National Health Policy 2017 target of 2.5% of GDP.

• Climate Insurance: Parametric weather insurance pays out automatically when weather triggers are met, giving fast relief after disasters.

• Example: Brazil's Bolsa Família conditional cash transfer programme, which links payments to children's schooling and health check-ups, is widely credited with reducing poverty and inequality, offering lessons for India's welfare design.

• Just Energy Transition: A dedicated fund should reskill informal coal workers in Jharkhand, Chhattisgarh and West Bengal as India moves towards its 2070 net-zero target.

Conclusion

Transitioning from uplifting the poorest (Antyodaya) to universal welfare (Sarvodaya) through quality jobs and human development is essential to secure the constitutional right to livelihood and achieve sustainable, equitable poverty eradication.

Source: THEHINDU