Poverty and Equity Brief Report of World Bank

• 12 May 2025

For Prelims: Poverty and Equity Briefs (PEBs), International Monetary Fund (IMF), World Bank, Multidimensional Poverty, Gini Index. 

For Mains: Poverty in India- factors, related schemes and way forward. 

Why in News? 

India's Poverty and Equity Briefs (PEBs), released by the World Bank in April 2025, highlight that India has successfully lifted 171 million people out of extreme poverty.   

 According to the report, the proportion of people living on less than 2.15 USD a day, which is the international benchmark for extreme poverty, fell sharply from 16.2% in 2011-12 to just 2.3 percent in 2022-23. 

What are the Poverty and Equity Briefs (PEBs)?  

• About: The PEBs show trends related to poverty, inequality, and shared prosperity in over 100 developing countries. 
  • These briefs are released twice a year, during the Spring and Annual Meetings of the World Bank and International Monetary Fund (IMF). 
• Key Indicators & Measurement: The latest data on key development indicators, such as poverty rates and total number of poor people, measured by using both national poverty lines and international benchmarks: 
  • The international extreme poverty line (USD 2.15 per day) 
  • The lower-middle-income line (USD 3.65 per day) 
  • The upper-middle-income line (USD 6.85 per day) 
• Methodology for India: The World Bank’s poverty estimates for India are based on the 2011–12 Consumption Expenditure Survey (CES) and the 2022–23 Household Consumption Expenditure Survey. 

 

What are the Findings of the Poverty and Equity Briefs Reports by the World Bank? 

• Rural & Urban Poverty Reduction: In Rural areas, extreme poverty fell from 18.4% in 2011-12 to 2.8% in 2022-23. 
  • In Urban centres, extreme poverty reduced from 10.7% to 1.1% over the same period. 
  • The gap between rural and urban poverty reduced from 7.7 percentage points to 1.7 percentage points, with an annual decline rate of 16% between 2011-12 and 2022-23. 

  

• Lower-Middle-Income Level: India’s poverty rate at the 3.65 USD per day line fell from 61.8% in 2011-12 to 28.1% in 2022-23, lifting 378 million people out of poverty. 
  • Rural poverty declined from 69% to 32.5%, while urban poverty dropped from 43.5% to 17.2%. 
• State-Wise Contribution: 
  • The five most populous states (Uttar Pradesh, Maharashtra, Bihar, West Bengal and Madhya Pradesh) accounted for 65% of the extreme poor in 2011-12.  
    • These states also contributed two-thirds of the poverty reduction by 2022-23. 
    • However, they still account for 54% of the extreme poor in 2022-23 and 51% of the multidimensionally poor in 2019–21. 
• Decline in Multidimensional Poverty: 
  • The World Bank’s Multidimensional Poverty Index (MPI), which includes extreme poverty but excludes nutrition and health deprivation, showed that non-monetary poverty (education and basic services) declined from 53.8 % in 2005–06 to 16.4% in 2019–21, and further to 15.5 % in 2022–23. 
    • India’s consumption-based Gini index improved from 28.8 in 2011-12 to 25.5 in 2022-23, indicating a reduction in income inequality. 

 

• Employment and Labour Trends: 
  • Urban unemployment has decreased to 6.6% in the first quarter of the FY 2024-25, the lowest since 2017-18. While employment of rural women in agriculture has increased. 
  • Self-employment is rising, especially among rural workers and women. Despite a female employment rate of 31%, gender disparities remain, with 234 million more men in paid work.  
  • Youth unemployment stands at 13.3%, rising to 29% among graduates.  
    • Only 23% of non-farm paid jobs are formal, and most agricultural employment remains informal.  

Note:  

• The Gini index measures the extent to which the distribution of income or consumption among individuals or households within an economy deviates from a perfectly equal distribution.  
  • A Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality. 

 What are the Factors Contributing to Poverty in India?  

• Rising Inequality: The unequal distribution of resources leads to relative poverty, where certain individuals and groups remain disadvantaged despite overall economic progress.  
  • According to the World Inequality Report (2022-23), the richest 1% own 45% of global wealth, while 3.6 billion people still live on less than USD 6.85 per day (Purchasing Power Parity (PPP)) and 1 in 10 women in the world lives in extreme poverty. 
• Social and Economic Exclusion: Certain groups, including women, marginalized communities, and those with disabilities, may face discrimination and barriers to accessing opportunities and resources, exacerbating poverty.  
• Gender Inequality: Women and girls often face discrimination and fewer opportunities, making it harder for them to escape poverty.  
  • According to the estimates of the World Inequality Report 2022, in India, men earn 82% of the labour income, whereas women earn 18% of it. 
• Youth Unemployment: The high number of unemployed youth, particularly in rural areas, can lead to poverty and social unrest.  
  • As per the latest available Annual Periodic Labour Force Survey (PLFS) reports, the estimated Unemployment Rate (UR) on usual status for youth of age 15-29 years in the country in the year 2023-24 was 10.2% which is lower than global levels. 
• Poor Infrastructure: Lack of access to basic necessities like better health facilities, quality education, clean water, sanitation, and adequate transportation systems can trap individuals in a cycle of poverty, limiting their economic opportunities and overall quality of life.  

 Schemes Related to Poverty Alleviation in India  

• Dindayal Antyodaya Yojana -National Urban Livelihood Mission (DAY-NULM)  
• Pradhan Mantri Awas Yojana-Gramin (PMAY-G)  
• Pradhan Mantri Garib Kalyan Yojana (PMGKY) 
• Pradhan Mantri Suraksha Bima Yojana 
• National Nutrition Mission (POSHAN Abhiyaan)  
• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA Scheme)   

 What Measures Can be Taken to Reduce Poverty in India? 

• Promoting Gender Equality and Empowerment: Strengthening laws such as the Equal Remuneration Act, 1976 to ensure equal pay for equal work can help address the gender wage gap.  
  • Additionally, vocational training and skill development programs for women, such as the Skill India Mission, can further empower women economically, especially in rural areas. 
• Inclusive Growth Policies for Marginalized Groups: Strengthen targeted programs, such as the Pradhan Mantri Adi Adarsh Gram Yojana, to address socio-economic disparities for scheduled tribes.  
  • Expanding access to higher education through scholarships and skill-building programs for marginalized groups can promote inclusivity. 
• Investment in Rural Employment and Skill Development: Expand Skill Development Programs like PMKVY (Pradhan Mantri Kaushal Vikas Yojana) to improve employability among the youth, especially in rural areas.  
  • Additionally, rural entrepreneurship initiatives under the Stand Up India Scheme can create more local employment opportunities. 
• Infrastructure Development in Underserved Areas: Investing in projects like the National River Conservation Plan and expanding clean drinking water access through  the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) can ensure basic infrastructure reaches all corners of the country.  
  • Increasing public-private partnerships to improve transportation and digital infrastructure can also facilitate broader access to economic opportunities. 

Conclusion 

India has made remarkable progress in reducing both monetary and multidimensional poverty, but inequality, youth employment, and data comparability remain key areas for policy focus. Regular surveys, broader poverty indicators, and gender-sensitive interventions are essential for sustaining inclusive growth. 

 UPSC Civil Services Examination, Previous Year Question (PYQ) 

 Prelims 

 Q. The Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development Initiative with UNDP support covers which of the following? (2012)

1. Deprivation of education, health, assets and services at household level 
2. Purchasing power parity at national level 
3. Extent of budget deficit and GDP growth rate at national level 

Select the correct answer using the codes given below: 

(a) 1 only 

(b) 2 and 3 only 

(c) 1 and 3 only 

(d) 1, 2 and 3 

Ans: (a) 

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 Mains 

 Q. Despite Consistent experience of high growth, India still goes with the lowest indicators of human development. Examine the issues that make balanced and inclusive development elusive. (2016)

 Q. Professor Amartya Sen has advocated important reforms in the realms of primary education and primary health care. What are your suggestions to improve their status and performance? (2016)

 Q. Poverty and malnutrition create a vicious cycle, adversely affecting human capital formation. What steps can be taken to break the cycle? (2024)