India has made substantial progress in reducing poverty, but crossing a line does not necessarily give a household economic security. A family may afford food, clothing and basic consumer goods yet struggle to pay for healthcare or quality education. Another may move above an official threshold because it receives subsidised food, while remaining vulnerable to a medical emergency or the loss of a job. Both may be counted as having escaped poverty even when their capacity to withstand a financial shock remains limited.
The World Bank’s October 2026 Poverty and Equity Brief estimates that the share of Indians living below its lower-middle-income poverty line of $4.20 a day, measured in purchasing power parity terms, will decline from 14.2% in 2026 to 12.1% by 2028. The projection is encouraging, although the pace of poverty reduction is expected to moderate. The figures also raise a question for policymakers: how can India convert gains in consumption into more secure and sustainable improvements in living standards?
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What has driven the decline in poverty?
The progress over the past decade is considerable. According to the World Bank, the proportion of Indians living below the $4.20-a-day threshold fell from 57.7% in 2011 to 16.1% in 2023, lifting an estimated 496 million people above that poverty line. Extreme poverty, measured against the international line of $3 a day, declined from 27.1% to 2.6% over the same period.
The World Bank attributes much of this improvement to stronger consumption growth, expanding employment and social transfers, including food subsidies. These developments have helped households meet a larger share of their basic needs. When families spend less on food because of subsidies, they can use some of the money saved for other necessities. Additional earners can also reduce a household’s dependence on a single source of income.
Employment has played an important role. The World Bank estimated that the number of people employed in India increased by approximately 134 million between 2017 and 2023, nearly twice the increase in the working-age population. A considerable part of this growth came from rural women entering paid work, adding to household earnings and consumption.
The expansion of e-commerce, quick-commerce, delivery and logistics services has created further work opportunities. Madan Sabnavis, chief economist at Bank of Baroda, has argued that the growth of these services, alongside social transfers and free food, has helped households retain more money for non-food expenditure. Such support can make a difference to families living close to a poverty threshold, although the durability of these gains depends partly on the earnings and security associated with the work they undertake.
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Crossing the poverty line is not the same as escaping vulnerability
The $4.20 threshold captures only part of India’s economic condition. In 2023, around 80% of the population remained below the World Bank’s upper-middle-income poverty line of $8.30 a day. This does not mean that four in five Indians were destitute. The international poverty lines are designed to measure different levels of economic deprivation across countries at different stages of development. The higher threshold reveals how widespread low living standards and economic vulnerability remain even after people cross the lower poverty line.
The quality of employment is central to this problem. An increase in the number of people working does not necessarily translate into higher real earnings if much of the additional work is concentrated in low-productivity activities. The World Bank has highlighted the weakness of real earnings despite the expansion in employment. A household may therefore cross a consumption-based poverty threshold because more of its members are working or because food subsidies reduce its expenditure, while its underlying earning capacity remains limited.
Youth unemployment adds to the concern. The Periodic Labour Force Survey reported that the unemployment rate among people aged 15–29 rose from 14.6% in April–June 2025 to 15.9% in April–June 2026. These figures point to the difficulty of ensuring that economic growth creates sufficient opportunities for young people entering the labour market. India needs employment that raises productivity and provides a reasonable prospect of sustained earnings growth.
The dependence of vulnerable households on public support also deserves attention. Sabnavis has warned that withdrawing assistance from families that remain economically insecure could push them back into poverty. A household that crosses a poverty threshold partly because it receives subsidised food may find its position deteriorating if that support is withdrawn before its earnings improve. Welfare programmes therefore need to be assessed alongside employment and income trends, rather than treating a reduction in measured poverty as sufficient grounds for reducing support.
For India’s Viksit Bharat ambition, the test is whether households can sustain improvements in their living standards as their reliance on transfers declines. Welfare remains necessary where deprivation persists. The longer-term objective should be to expand productive employment and household earning capacity so that public assistance protects people against hardship without becoming their principal defence against it.
Why income measures need a multidimensional view
Income and consumption statistics remain indispensable, but they cannot fully describe deprivation. A household’s circumstances also depend on nutrition, schooling, healthcare, sanitation, drinking water, electricity and housing. Two families with similar consumption levels may face very different prospects if one has access to reliable public services and the other does not.
India’s National Multidimensional Poverty Index, developed by NITI Aayog using a methodology aligned with the work of the United Nations Development Programme and the Oxford Poverty and Human Development Initiative, provides a complementary way to assess these disadvantages. It examines overlapping forms of deprivation that monetary measures may not capture adequately. A child who suffers from undernutrition and misses school regularly, for example, may face poorer employment prospects in adulthood even if household consumption improves in the meantime.
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The two approaches answer different questions. Income-based poverty estimates show how many people fall below a specified monetary threshold and how consumption changes over time. Multidimensional measures help identify the basic services and opportunities that people lack. Policymakers need both to understand whether economic growth is translating into broader improvements in living standards.
India’s poverty reduction over the past decade is a substantial achievement. The estimated 496 million people who moved above the World Bank’s lower-middle-income poverty line between 2011 and 2023 represent a major improvement in material welfare. But stagnant real earnings, youth unemployment and the large share of the population below the higher poverty threshold indicate that many households remain exposed to setbacks. The next phase of poverty reduction will depend on whether India can turn higher consumption into more productive employment, stronger earnings and access to essential services that households can rely on.