The World Bank has projected India's poverty rate at the $4.2-a-day threshold to decline from an estimated 14.2% in 2026 to 12.1% by 2028, according to its October 2026 Poverty and Equity Brief. However, the pace of reduction is expected to moderate despite ongoing gains in employment, consumption, and social transfers. This projection comes after India achieved remarkable poverty reduction over the past decade, with the share of population living below the lower-middle-income poverty line declining from 57.7% in 2011 to 16.1% in 2023, lifting an estimated 496 million people out of poverty.
Extreme poverty, measured using the international poverty line of $3 a day in purchasing power parity terms, also declined significantly from 27.1% in 2011 to 2.6% in 2023. However, poverty remains widespread when measured against higher income thresholds, with about 80% of India's population living below the upper-middle-income poverty line of $8.3 a day in 2023, as reported by the World Bank. The poverty rate stood at 19.3% in rural areas compared with 8.6% in urban areas in 2023, indicating continued urban-rural disparities.
India's employment expanded by about 134 million people between 2017 and 2023, nearly twice the increase in the working-age population, according to the World Bank report. Much of this growth was driven by rural women entering paid work, increasing the number of earners per household. As reported by Bank of Baroda's chief economist Madan Sabnavis, the emergence of e-commerce and quick-commerce services has led to widespread job creation, although much of the work is low-skilled. However, these employment gains have not translated into marked improvements in real earnings, which remained broadly unchanged.
Youth unemployment increased from 14.6% in Q1 2025-26 to 15.9% in Q1 2026-27, particularly among rural young women, as reported by the World Bank. This trend highlights ongoing challenges in creating quality employment opportunities for younger demographics. The report noted that job creation has been concentrated in relatively low-productivity activities, limiting the impact on real earnings growth.
Despite significant progress, the World Bank cautioned that poverty reduction was driven primarily by strong consumption growth, rising employment, particularly among women, and expanded social transfers, including food subsidies. According to Bank of Baroda's Madan Sabnavis, poverty remains concentrated among rural households and in states stretching from Uttar Pradesh to West Bengal, which accounted for about 57% of the country's poor population. He emphasized that the only sustainable way to continue reducing poverty is through job creation, noting that cash transfers would need to continue if employment opportunities are not available, as stopping them would likely result in people sliding back into poverty.
