Pathways to Prosperity: An e-Symposium


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Blog #2: On poverty and prosperity, lot done, lot to do


India is home to the largest number of poor people in the world, as well as the largest number of people who have recently escaped poverty. Over the next few weeks, this blog series will highlight recent research from the World Bank and its partners on what has driven poverty reduction, what still stands in the way of progress, and the road to a more prosperous India.

We hope this will spark a conversation around 
#WhatWillItTake to #EndPoverty in India. Read all the blogs in this series, we look forward to your comments.

The rapid decline in India’s poverty levels in the recent decade augurs well for the country’s efforts to eradicate poverty. Though the decline was faster and more broad-based than in the preceding decades, examples from across the developing world suggest it could have been more inclusive and responsive to economic growth.

India has made tremendous progress in reducing absolute poverty in the past two decades. The standard way to determine whether a household is poor is to compare its daily expenditure per capita to a minimum consumption threshold, or poverty line. Based on India’s official line, the share of the population living in poverty was halved between 1994 and 2012, falling from 45 percent to 22 percent (figure). During this period, an astonishing 133 million people were lifted out of poverty. Moreover, the pace of poverty reduction accelerated over time and was three times faster between 2005 and 2012 - the years for which the latest set of government data are available - than in the previous decade. At this pace, the fall in extreme poverty in India since 2005, pegged at $1.90 a day, 2011 PPP, matched or exceeded the average rate of decline for the developing world as a whole and the middle-income countries as a group.

analysed data in graphs
Note: Based on the international poverty line of $1.90/day (2011 PPP).
Figures are available at roughly 3-year intervals during 1990-2008; for India, actual survey years are used.
Source: World Development Indicators (accessed on November 16, 2015)

However, poverty reduction did not benefit all segments of the population equally. The fall in poverty levels could have been much higher if growth had been more inclusive. Notably, while consumption levels have increased rapidly in recent years, the poorest 40 percent of households have seen their incomes grow at a slower pace than the population as a whole. On this measure of ‘shared prosperity’ – or equitable improvement among all people - India lags behind countries at a similar stage of development. Although India ranked 16th among 51 middle income countries in average consumption growth during 2005-2012, it ranked much lower - 27th - in consumption growth for the poorest 40 percent during this period.

In many cases, when a country experiences high growth, rapid poverty reduction quickly follows. In India’s case, however, high growth did not lead to as quick a decline in poverty as we would have expected. The responsiveness of poverty to per capita GDP growth in India is lower than the average for developing countries. A few telling indicators reveal the extent of this divergence: while India ranked in the top 10 percent of developing countries in per capita GDP growth during 2005-2012, it featured just above the 60th percentile in the rate of poverty reduction during this period. And, in general, this relationship between growth and poverty reduction varied widely between states.

The sheer scale of poverty in the country remains sobering. In 2012, India was home to 262 million poor (as defined by the $1.90 per day international poverty line). Put differently, one in four people living in extreme poverty across the world are Indians.[1]
Poverty is closely inter-twined with geography. The poor are still far more likely to be found in India’s villages which are home to 80 percent of the country’s poor. Moreover, the poorer states are not catching up with their more prosperous counterparts. If the current trend of slower poverty reduction in the poorer states persists, poverty will become increasingly concentrated in a handful of lower income states. It is worth noting that in 2012, three large lower income states alone (Uttar Pradesh, Bihar and Madhya Pradesh) accounted for 44 percent of India’s poor. And, when we look beyond consumption poverty to other measures of deprivation, India’s picture looks more challenging. We discuss this in a later article in this series.

Nonetheless, the story of India’s transformation remains one of optimism. Although the full potential of economic growth to reduce poverty is yet to be unleashed, the links between growth and poverty reduction have become stronger than in the previous decade. In addition, the manner in which growth has impacted poverty in urban and rural areas, as well as in different sectors, has changed significantly. This forms an integral part of India’s story that future articles in this series will explore.

[1] India’s poverty at the $1.90 a day line may be significantly lower if new consumption estimates produced for 2009-10 and 2011-12 by the National Sample Survey organization are used.  Based on these measures, India would account for a smaller share (roughly 15 percent) of the global extreme poor but would still be home to the largest number of poor.

Reference: Ambar Narayan and Rinku Murgai: “Looking Back on Two Decades of Poverty and Well-Being in India”, WPS 7626

This blog was originally published in the Indian Express on 18th May, 2016.


Ambar Narayan

Lead Economist, Poverty Global Practice, World Bank

Join the Conversation

K Jude Sekar
May 18, 2016

What are the ways to make our growth more inclusive? How can Government and the private sector play a significant role in achieving this? Are there any pointers or trendsetters in this regard? Can NGOs contribute to achieve this end?

May 23, 2016

Thank you for your comment. Subsequent articles (and there are several more planned in this series) delve deeper into the issues. While the role of the government, the private sector, and civil society are not discussed explicitly in these articles, they provide insights on the pathways out of poverty and vulnerability – what has worked so far, and what are the key challenges going forward – that are important for all actors to take into account.
So do stay tuned.

May 30, 2016

Sir, each developmental process initiated should include all actors as participatory partners.For Example - all developmental process land is the base. A land looser and its dependents, laborers derive livelihood from that, on that land should be the partners of the process. If forest land can be under the purview of people decision: why not the revenue lands and land of landlords?
thank you

K Jude Sekar
May 25, 2016

Appreciate your kind response. Will surely follow this series of blogs rather keenly. Government, both federal and in the states have several poverty- alleviation programmes, while the NGOs have several such programmes. As for the private sector, under the Corporate Social Responsibility, several good initiatives have been made and are still ongoing in many areas.What is needed is a co-ordinated approach to strike at the roots and keep striking to ward off poverty totally. Would the blogs lead to such a scenario as the term "pathways out of poverty...." seem to suggest?

Ismaila A. Hassan
May 21, 2016

The trends on the chart has been a promising one,though the number of people living within the income threshold is significantly large.Inclusive participation of everyone in economic activities is critical to the eradication of poverty.We must do away with divergence that are detrimental to inclusivity, Even growth ensued once everyone is on board and partisan.Any increase in income amongst the poor improves on the broader economic conditions and speedup the reduction in poverty level.

shankar lal dhakar
May 23, 2016

Why india is a home of the large number of poor people. When comparing between #American #Indian lifestyle. Indians are spending more time with their culture and traditions which are useless because of in this modern world everyone wants his own prosperity so they are still making more complex and psychotic traditions but not modifying their culture and tradiations. Probably it is a one of the reason of poverty in India as well as this is interconnected with climate change. in fact .... time uses per capita in which things is depended to response means good and advance time spending statistics will be give the best results. According to me education and good and effective awareness can alter the country's situation. Actually in the india the government of India is responsible for all of that for example - corruption, political parties reformation, jealous, at least they are not experiencing real power of unity everyday. Some people using their power of money physically, psychologically and with things but they do not know what they they are doing because they know i have money means i'm right and all my actions are right but it is not as they think. No management of things if anyone can access good the quality of products it means it is their responsibility to know what will the byproducts as they produce. And the biggest question is why still do not about the population explosion and its effects there any government fault to making fake statistics about the awareness. ...... some where education is a kind of business means they focusing on their benefits as much as they can get but not the quality of education in india government is also involved in this matter --- Education is a primary,effective and last hope for solutions ---

Dr Mahesh Chander
May 26, 2016

Agriculture still is an important contributor to national economy in India. Going by the productivity of major crops & livestock - its is even less than half of the world averages in many cases. How this can be effectively addressed-private sector vs public institutions' role need to be analyzed. What agricultural extension & rural advisory services can do to remedy the situation?

shailendra Tiwari
May 30, 2016

The image of poverty portrayed is misnomer as standards used are based on consumerist society. In india austerity and simple living is rooted in culture and as such, living happy life is the goal rather then living a life full of modern days comforts and under the shadow of debt national or personal is being considered.We are poor if our needs are more than our requirements by any standards. Gandhian living is the answer to india and swedeshi is the way.

Asheesh K. Pandey
July 22, 2016

Only one option to remove poverty is to provide employment. Provide some work to youth of India which is having highest population of youth in the world.