A new study by economists Surjit S Bhalla and Karan Bhasin indicates that India has achieved a lot in poverty reduction and inequality in the last decade. According to 2022-23 and 2023-24 government household expenditure data, the study indicates that India's extreme poverty has almost vanished and that inequality has fallen drastically.

The study reports that at the World Bank’s $3.65 purchasing power parity (PPP) poverty line, India’s poverty rate has plummeted from 52% in 2011-12 to just 15.1% in 2023-24. More notably, at the lower $1.90 PPP extreme poverty line, the rate has now dropped below 1%.

The largest gains have been seen among the bottom three percent of the population, whose consumption levels have increased for the first time in unprecedented magnitudes.

Is inequality really falling?

Contrary to the general belief that inequality is increasing in India, the study reveals that consumption inequality has actually fallen sharply. The Gini coefficient—a popular metric of inequality—has reduced from 37.5 in 2011-12 to 29.1 in 2023-24.

The study points out that this is one of the biggest declines in inequality among large economies.

"Only two other countries better the Indian record – Bhutan and the Dominican Republic... However, these two countries have very small populations," the study notes.

"Inequality reduction for such a large and high-growth economy like India is exceptional and unique," it adds.

Time for a new poverty line?

The research contends that India's existing methods of measuring poverty no longer accurately represent the nation's economic development. The authors suggest adopting a new standard, for example, calculating poverty based on the bottom 33rd percentile of expenditure or following a relative poverty measure like that of Europe, where poverty is calculated as 60% of median income.

Though mandated to do so, NITI Aayog has not yet updated the official poverty estimates, which were previously done by the Tendulkar and Rangarajan committees.

How reliable is the data?

Due to the concerns regarding data reliability, the study points out that the latest surveys used an improved three-visit methodology to capture consumption data more precisely.

It also shows that the survey consumption-to-national-accounts (S/NA) ratio remained stable over time—at 46.9% in 2022-23 and 47.9% in 2023-24, compared to 52.4% in 2011-12. This stability suggests that the observed decline in poverty is not due to survey changes but reflects real economic trends.

With near eradication of extreme poverty, the research indicates that India can now focus on building its middle class rather than poverty reduction. 

You might also be interested in- Women’s job opportunities in India increase by 48% in 2025