India’s recent ascent as the world’s fourth-largest economy has generated headlines. But perhaps the more remarkable achievement lies not in overtaking Japan in GDP terms, but in sharply reducing poverty over the past decade. According to the National Statistics Office’s latest Household Consumption Expenditure Survey, the national poverty rate plummeted from 29.5% in 2011–12 to just 4.9% in 2023–24. The World Bank echoes this, noting extreme poverty fell from 16.2% to 2.3%, lifting more than 170 million people out of destitution.
Even more striking, poverty halved in just the last year—from 9.5% in 2022–23 to 4.9% in 2023–24. Consumption inequality too narrowed, with the Gini coefficient declining significantly. India appears to be winning the war on poverty. But that victory may not be as comprehensive as it seems.
A deeper look, based on longitudinal studies such as the India Human Development Survey, reveals a more volatile reality. Economic growth has indeed allowed millions to escape poverty. Yet a sizable portion of the poor today—about 62%, according to the latest round of the IHDS—is newly poor. These are people who had previously exited poverty but have fallen back due to health shocks, job losses, climate disasters or other unforeseen emergencies. In short, India is seeing a decline in chronic poverty, but a worrying rise in what experts call transient poverty.
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Growth without broad-based employment
India’s economic expansion has not translated into equitable or resilient livelihoods. The sectors that have propelled GDP—IT, finance, e-commerce—are capital-intensive and urban-centric, employing just 30% of the workforce. Meanwhile, agriculture, which supports nearly 50% of India’s workers, contributes only 18% to GDP. This imbalance means that the fruits of growth are concentrated in relatively few hands.
Indeed, inequality remains a structural barrier. According to the World Inequality Report 2022, the top 1% of India’s population holds more than 40% of the nation’s wealth, while the bottom 50% own just 3%. The top 10% earn over 57% of total income. It is no surprise then that while India’s economy approaches $4 trillion, its per capita income hovers at just $2,880—compared with $13,000 in China and $33,900 in Japan.
This disparity undermines the narrative of national prosperity. GDP per capita remains the more telling metric for quality of life—and by that measure, India still trails not just developed nations, but upper-middle-income peers.
The hidden trap of healthcare costs
One of the primary triggers of transient poverty is healthcare-related financial shock. As Duke University’s Anirudh Krishna and University of Maryland’s Sonalde Desai note, millions of Indians who had climbed above the poverty line fall back when hit by unexpected illness. India’s out-of-pocket health expenditure stands at nearly 50% of total health spending—among the highest globally. In 2011–12 alone, 55 million Indians were pushed into poverty due to healthcare costs, with 38 million falling below the line due to spending on medicines.
The government’s flagship response—the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY)—was launched in 2018 to address precisely this issue. Covering hospitalisation costs up to Rs 5 lakh for the poorest 40% of the population, the scheme was hailed as a game-changer. Yet, five years on, concerns remain. PM-JAY still uses data from the outdated 2011 Socio-Economic Caste Census, potentially excluding millions who have fallen into poverty since. Moreover, the scheme’s uneven rollout across states, low utilisation in high-poverty regions like Uttar Pradesh and Bihar, and persistent out-of-pocket costs even for enrolled patients have limited its impact.
A 2020 study in Chhattisgarh found that enrolment in publicly funded health insurance did not significantly reduce catastrophic health expenditure. Nor did it increase hospital-care usage. Meanwhile, only 11% of PM-JAY claims were filed in public hospitals, with most claims concentrated in a few private facilities, raising concerns over oversight and value for public money.
War on poverty needs a new strategy
The challenge is that India’s anti-poverty architecture remains largely static—designed to identify and support the chronically poor based on data updated every decade. But in a fast-changing economy, where people move in and out of poverty frequently, such an approach falls short.
What India needs is a nimble, real-time safety net that can respond to transient poverty as it emerges. This means not just better data systems, but also more adaptive welfare design. Progressive taxation—particularly on capital gains and wealth—can fund such systems. So can investments in universal basic infrastructure, including education, public health, and social insurance.
Relying primarily on targeted schemes may no longer suffice. A shift toward universal entitlements—such as quality public healthcare and free school education—could both reduce inequality and prevent people from slipping back into poverty.
India’s development journey cannot be measured by GDP alone. The goal must be not just to grow richer as a country, but to ensure that every citizen has a secure, dignified life. The real milestone worth celebrating would be one where India’s poorest are no longer one illness away from financial ruin, one death away from debt, or one failed harvest away from destitution.
For that, policy must move beyond the optics of rankings and global comparisons. The real question is whether India’s anti-poverty strategy is future-ready. A focus on dynamic targeting, improved public provisioning, especially in health and education, and a commitment to addressing inequality—not just through rhetoric but redistributive policy—will be key to India achieving its 2047 vision.
If India truly wants to be a developed nation in the centennial year of independence, it must first ensure that no Indian falls back into poverty simply because life took an unexpected turn.