Poverty in India: Word Bank’s claims of dramatic decline misleading..

India’s claims of a dramatic decline in poverty rest on questionable comparisons, methodological gaps and an economic record that tells a rather different story.

India’s poverty debate is being resha ped by the World Bank’s claim that extreme poverty has fallen to just 2.6% from 27.1% in 2011, bringing the country close to eliminating it.^[1]

This striking conclusion, based on the NSO or National Statistical Office’s 2022-23 and 2023-24 consumption surveys, overlooks fundamental changes in survey methodology that make comparisons with the 2011-12 data problematic.^[2]

India’s Household Consumption and Expenditure Survey data collection depends heavily on the recall period used. Until 2012, the surveys relied on a single household visit, limiting the number of items covered during a visit improves recall and reporting.

The new surveys, however, involve three monthly visits to households. Earlier studies have shown that collecting data over separate visits significantly improves reporting. The surveys also provide separate expenditure data after including estimated? values for freebies. Both changes are expected to capture expenditure more accurately and produce higher consumption expenditure estimates., and thereby bring down the numbers of poor people in India.^[3][4]

Hence, the National Statistical Organisation data for 2022-23 and 2023-24 are not strictly comparable with those for 2011-12. The question then is: iff the two HCES series are not comparable, on what basis is the World Bank estimating such a sharp fall in poverty?

Current poverty estimates overlook the higher household expenditure estimates resulting from multiple visits while retaining a markedly lower poverty estimate which is? from the earlier series. Simply updating the 2011-12 poverty lines using a price index is insufficient. New poverty lines are needed.

Since 2014, the Indian government has not produced its own poverty line, breaking with a longstanding practice of the Planning Commission; instead, relying on World Bank estimates.

Overlooking data limitations to showcase a dramatic decline runs counter to research-based findings. The same concern applies to the Multidimensional Poverty Index released by NITI Aayog , when? which also claims a sharp reduction in poverty.^[5]

Another estimate by economists Rangarajan and Mahendra Dev — for 2023 and 2024 also overlook differences in methodology.^[6]

But the problem is not merely methodological here. It is also substantive.

The World Bank has also produced a multidimensional poverty estimate. It starts with its own estimate of monetary poverty, using the three US dollars Purchasing Power parity (PPP) poverty line , which puts the share of the poor at 5.3%. It then adds five indicators from the Oxford MPI’s 10-indicator list . Yet it produces no index.^[1][7]

The World Bank offers no theoretical explanation for excluding a health-status indicator. Nor does it explain why there are no output or outcome indicators, only input indicators. It provides no explanation of how these input indicators can establish a fall in non-monetary poverty.

On monetary poverty, the World Bank’s Poverty and Equity Brief for October 2026 says: “This progress was mainly driven by strong consumption growth, rising employment, especially among women, and expanded social transfers, including food subsidies.” These claims warrant closer examination.^[1]

There is strong evidence that poverty fell sharply between 2004 and 2012, by 138 million people using the Tendulkar line. The reasons for a slower reduction since 2015 have been well recorded .

The first is the difference in GDP growth between the two periods. Growth averaged 7.8% a year between 2004 and 2014 compared with 6.2% over the 12 years from 2014 to 2026. The higher growth rate between 2004-2014 was supported by stronger savings and investment.

By 2003-04 , savings had reached 23% of GDP and investment 24%. Appropriate macroeconomic policies then helped raise the investment-to-GDP ratio to between 32% and 38% during 2004-14 . India has not achieved a higher level before or since.

GDP growth subsequently slowed to 6.2% a year over 2014-24. Arvind Subramanian estimated that the actual growth rate for 2012-23 was about 4.5% a year. Savings and investment rates also declined. The investment rate ranged between 26% and 32% a year during 2014-24 , primarily because wages, hence savings, had fallen.^[8]

The pattern of growth also changed. During the earlier period, growth extended across both organised and unorganised sectors. Aggregate demand remained strong, with public and private investment, final consumption, exports and government expenditure all contributing. Non-farm employment grew by an unprecedented 7.5 million jobs a year.

By contrast, policy-induced shocks since 2016 — demonetisation, a poorly designed GST and nationwide lockdowns — caused employment in the unorganised sector and MSMEs to collapse. The post-Covid recovery has been K-shaped , widening inequality in an already unequal country.^[9]

Third, job growth differed sharply between the two periods. For the first time in India’s post-independence history, the absolute number of agricultural workers fell after 2004, as non-farm employment expanded. This tightened rural labour markets until 2014.

The opposite happened after 2020, when 65 million workers were added to agriculture, partly because of reverse migration.

The World Bank cites the creation of 134 million jobs between 2017 and 2023 particularly among women, as a reason for falling poverty. But it fails to mention that 65 million of these jobs were in agriculture . Men returned to rural areas after millions of MSME jobs were lost in cities and peri-urban areas.

More significantly, women who had earlier been leaving agriculture and becoming better educated returned to farm work between 2017 and 2024, mostly as unpaid family labour. Wages stagnated in both rural and urban India between 2017 and 2025.

Finally, rising real wages between 2004 and 2014 boosted private final consumption expenditure, particularly on basic consumer goods. For the first time in India’s history, the absolute number of poor people fell. This had not happened between 1950 and 2004. The incidence of poverty had declined since 1973-74 but the total number of poor fell only between 2004 and 2012 .

Since 2015, real wages have stagnated. Non-farm job creation has been only half the required level. India needs 12 million new non-farm jobs every year for the next 20 years as jobs are needed for a larger unemployed, larger labour entrants and larger number of NEETs (Not in Employment/Education/Training) .

In short, none of these transformations in ordinary people’s lives has been sustained since 2015. Growth has slowed, its pattern has become more unequal, the K-shaped, non-farm job creation has declined, and real wages have stagnated.

Poverty may have fallen since 2015. But by how much, that remains unknown.

Santosh Mehrotra is Visiting Professor at Higher School of Economics, Moscow, and former professor of Jawaharlal Nehru University.

Originally published under Creative Commons Attribution 4.0 by 360info .^[10][11]