WhatsApp Channel Join Now
Telegram Group Join Now
Relevance: GS-II (Welfare) | GS-III (Economy) | Source: The Hindu
The Context: In its October 2026 report, the World Bank praised India for achieving one of the fastest poverty reductions in the world over the last decade. However, while basic deprivation has plunged, the report flags serious hidden hurdles: deep wage gaps, regional poverty pockets, and rising youth joblessness.
1. The Big Numbers: How Fast Did Poverty Fall?
- The $4.20/Day Line: Under the Lower Middle-Income benchmark, India’s poverty rate dropped from 57.7% to 16.1% between 2011 and 2023—pulling 496 million people out of poverty.
- Extreme Poverty ($3.00/Day): Over the same twelve years, extreme poverty nearly vanished, falling from 27.1% down to just 2.6%.
- Beyond Just Cash (MPI): Looking at health, education, and living standards (Multidimensional Poverty Index), deprivation dropped from 53.8% (2005–06) to 16.4% (2019–21).
- What Worked: Higher family spending, more rural women joining paid work, and government welfare—especially free foodgrain schemes—drove this massive shift.
2. The Warning Signs (Structural Gaps)
- Stark Wage Gaps: Income inequality remains wide—the top 10% of workers earn roughly 13 times more than the bottom 10%.
- The Eastern Belt: Poverty is shrinking into specific pockets. A single belt stretching from Uttar Pradesh to West Bengal now holds 57% of India’s total poor.
- Youth Unemployment: While total jobs grew by 134 million (2017–2023), youth unemployment recently crept up from 14.6% to 15.9%, hurting young rural women the most.
3. Why Did the Poverty Lines Change? (2021 PPP)
- Updated Price Tags: To reflect global inflation and real local buying power (Purchasing Power Parity – PPP), the World Bank updated its baseline from 2017 prices to 2021 prices. This raised the global extreme poverty line from $2.15 to $3.00/day, and India’s LMIC line from $3.65 to $4.20/day.
Practice MCQ
Q. Consider the following statements regarding poverty estimation frameworks:
- Following the 2021 Purchasing Power Parity (PPP) revisions, the World Bank updated the international extreme poverty line from $2.15 to $3.00 per day.
- NITI Aayog’s National Multidimensional Poverty Index (MPI) uses the exact same 10 indicators as the Global MPI without any additions.
Which of the statements given above is/are correct?
(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
Answer: (a) 1 only
Hint: Statement 1 is correct; the 2021 PPP update raised the extreme poverty line to $3.00/day (and the LMIC line to $4.20/day). Statement 2 is incorrect because NITI Aayog’s National MPI adds two India-specific indicators—Maternal Health and Bank Accounts—bringing its total to 12 indicators.
Hint: Statement 1 is correct; the 2021 PPP update raised the extreme poverty line to $3.00/day (and the LMIC line to $4.20/day). Statement 2 is incorrect because NITI Aayog’s National MPI adds two India-specific indicators—Maternal Health and Bank Accounts—bringing its total to 12 indicators.
Start Yours at Ajmal IAS – with Mentorship StrategyDisciplineClarityResults that Drives Success
Your dream deserves this moment — begin it here.