In their poverty and equity brief published in October 2026, the World Bank reported that from 2011 to 2023, the percentage of people living in extreme poverty in India has significantly decreased from 27.1 per cent to 2.6 per cent. This remarkable achievement in poverty reduction has been recognised as one of the fastest in the world. Consequently, India has succeeded in lifting approximately 496 million people—more than the combined population of the United States and Russia—out of the poverty trap.
The World Bank report further stated that even when considering the poverty line set for lower-middle-income countries at $4.20 per day, the poverty rate in India has decreased from 57.7 per cent to 16.1 per cent during this time. However, the report cautions that part of this recent success in poverty reduction might also be due to improvements in measurement methods alongside genuine improvements in living standards.
Indeed, both financial and non-financial poverty indicators improved in India between 2011 and 2023. However, this improvement has not been uniform across all regions of the country; rather, 57 per cent of India’s total poor population is concentrated in a contiguous geographic area stretching from Uttar Pradesh to West Bengal.
The World Bank anticipates that poverty in India will continue to decrease in the future, although the pace of reduction is expected to be relatively slow. According to the World Bank's forecast, based on the $4.20 per day poverty line, India's poverty rate could decline from 14.2 per cent in 2026 to 12.1 per cent by 2028.
Beyond these statistics and trends, two fundamental questions arise. First, what factors have contributed to India’s significant success in poverty reduction? Second, what lessons can be learned from this experience? It can be presumed that four key reasons primarily drove the rapid reduction in India’s poverty rate.
The first reason is the maintenance of high economic growth over a long period. From 2010 to 2025, India consistently achieved high and stable economic growth, making it one of the world’s fastest-growing major economies. India’s economic growth began at 8.5 per cent in 2010. Despite a slight slowdown due to global and domestic financial contractions in the following four years, growth soon rebounded. In 2015-2016, the country’s real GDP growth was close to 8.3 per cent. Although the growth contracted during the COVID-19 pandemic, India achieved a historic growth rate of nearly 10 per cent in 2021. From 2022 to 2025, India averaged over 7 per cent economic growth. Such high growth over a long period has had a significantly positive impact on India’s poverty situation.
Firstly, India’s experience highlights the importance of reforms for long-term economic growth. Especially significant are reforms in the revenue and regulatory framework, structural changes in the economy to increase the GDP and employment share of the production sector, massive investments in infrastructure (including roads, highways, railways, IT connectivity), and the expansion of service-based sectors like IT, business services, and global capability centres, as well as the overall technological transformation of the economy.
The second reason for the success in poverty reduction in India is robust growth in consumption expenditure. Between 2015 and 2025, India experienced profound and consistent structural changes in personal consumption expenditure. During this period, the nation’s total family consumption expenditure nearly doubled, increasing from $1.24 trillion in 2015 to $2.24 trillion in 2025. Approximately 60 to 70 per cent of India’s total GDP comes from personal consumption expenditure. Hence, this decade-long surge in consumption expenditure has been one of the main driving forces behind the country’s high economic growth and poverty reduction.
Indian consumers’ inclination towards higher quality products has also become evident. That is, buyers have become more interested in purchasing high-quality goods instead of relatively cheaper products. Consequently, in the Indian household budget, the share of spending on non-essential goods and services has historically increased from 15 per cent to 36 per cent by 2025.
Simultaneously, Indian households have begun prioritising services and life experiences over tangible goods. For example, participating in cultural events, watching sports, attending music concerts, dining out, and engaging in recreational travel have become more prominent. Between 2020 and 2025, Indians’ spending on foreign travel increased from 270 million rupees to 400 million rupees.
The remarkable reduction in poverty in India over the past decade owes significantly to the increase in employment, especially for women. Between 2014 and 2024, India created over 170 million job opportunities, averaging 17 million new jobs annually. The unemployment rate in India decreased from 7.6 per cent in 2015 to 4.2 per cent in 2025. There have also been sectoral changes in employment structure. Although 41 per cent of India’s total labour force is still engaged in agriculture, the relative importance of agriculture in employment is gradually decreasing.
Currently, about 26 per cent of India’s total labour force is employed in the manufacturing and construction sectors, and the remaining 33 per cent in the service sector. Significant structural changes have also occurred in women’s labour force participation. While the employment-related ratio for women was around 22 per cent in the mid-2010s, it increased to over 40 per cent by 2025. The growth in wage-based and self-employment opportunities in rural and urban areas has played a major role in this regard.
The fourth reason for India’s significant poverty reduction is the unprecedented and silent revolution in the country’s social security system. Between 2015 and 2025, India expanded its social security programmes to cover 64 per cent of the total population, up from 19 per cent. This expansion has brought over 940 million citizens under at least one social security benefit. This initiative is one of the largest expansions of social safety nets in world history.
In 2019, only four states in India had regular monthly cash assistance programmes. By 2025, 17 out of India’s 28 states and Delhi had implemented monthly cash assistance programmes. These initiatives have significantly contributed to bringing the extreme poverty rate down to 2.6 per cent by 2023.
Additionally, providing financial assistance ranging from 1,000 to 2, 500 rupees per month to low-income families has offered vital support for their livelihoods. This has led to increased family savings, enhanced women's roles in managing family expenditures, and improved their societal status.
Now, let us consider what lessons can be learned from India’s recent historical experience in poverty reduction.
Firstly, India’s experience highlights the importance of reforms for long-term economic growth. Especially significant are reforms in the revenue and regulatory framework, structural changes in the economy to increase the GDP and employment share of the production sector, massive investments in infrastructure (including roads, highways, railways, IT connectivity), and the expansion of service-based sectors like IT, business services, and global capability centres, as well as the overall technological transformation of the economy.
Secondly, India’s growth strategy aimed not only at achieving long-term economic growth but also at making that growth pro-poor by increasing productive employment opportunities. In light of this experience, adopting an employment-driven growth strategy rather than a growth-driven employment strategy could be more effective for developing countries. This is because many countries have experienced jobless growth in the past. India has demonstrated that achieving high economic growth and high employment targets simultaneously is possible.
Other countries can learn from India's largest social security programmes, particularly regarding beneficiary verification, targeted benefits provision, programme implementation, evaluation, and necessary programme modifications.
Thirdly, India’s experience with consumption expenditure growth suggests focusing on increasing consumption growth in the rural economy rather than urban areas, which can enhance overall economic consumption. This is particularly relevant for countries where the majority of people live in rural areas. In India, significant shifts towards non-agricultural employment (currently making up 50 per cent of rural income) have caused real rural income growth to surpass urban wage growth rates.
This has been one of the main driving forces behind rapid consumption expenditure growth in India. The core lesson from this experience is to emphasise the rural economy and aid its rapid development to boost consumption in the economy. As economic growth increases, consumers will decrease the portion allocated to basic food expenses from their total expenditure and redirect that money towards products and services like electronics, mobile phones, automobiles, and luxury personal care items.
Fourthly, India’s experience in creating productive employment suggests that increasing human capacity, equitable distribution of resources, access to basic social services, and fairness in income distribution are essential. Similarly, ownership of assets at the family level also has a clear impact on future economic success. Creating more opportunities for girls and women and ensuring investments in their economic, legal, and political empowerment are crucial for employment growth.
Constitutional and legal reforms can directly increase women's participation in economic activities. Providing families with infrastructure facilities like alternative energy, water, and electricity enables women to engage in self-employment or participate in the labour market. Ensuring women's access to productive assets like land and loans is also essential for economic empowerment.
Fifthly, India’s experience in social security indicates the need to enhance adequate revenue allocation for such programmes and ensure their expansion across various geographic regions of the country. India’s social assistance programmes have also demonstrated how technological infrastructure or ‘tech stack’—like IT connectivity mechanisms—can expand the scope and effectiveness of programmes. In this context, women-centric welfare programmes, assistance in agriculture and rural sectors, and the expansion of the social assistance coverage are particularly important.
Other countries can learn from India's largest social security programmes, particularly regarding beneficiary verification, targeted benefits provision, programme implementation, evaluation, and necessary programme modifications.
Celebrating the significant success of poverty reduction in India should not merely focus on its achievements. More importantly, it is about learning from this experience and finding ways to apply those lessons to the poverty reduction efforts of other developing countries based on their specific realities and needs.
#Selim Jahan is the former Director of the Human Development Report Office of the United Nations Development Programme (UNDP).
*Opinions expressed here are the author's own.
#This article, originally published in Prothom Alo online edition, has been rewritten in English by Rabiul Islam.