India’s Poverty Rate Expected to Drop to 12.1% by 2028, Says World Bank

The World Bank projects a steady decline in India’s poverty rate over the next few years, estimating it will fall to 12.1 percent by 2028 from 14.2 percent in 2026, based on the $4.2-a-day poverty threshold. While the pace of improvement is expected to slow, the overall trend highlights significant progress in reducing poverty in the country.

Over the past decade, India has seen a remarkable drop in poverty levels. According to the World Bank’s October 2026 Poverty and Equity Brief, the proportion of people living below the lower-middle-income poverty line decreased sharply from 57.7 percent in 2011 to 16.1 percent in 2023. This decline means nearly 496 million people have moved out of poverty during this period.

Extreme poverty, defined by the international standard of $3 per day in purchasing power parity terms, also experienced a dramatic fall. The rate dropped from 27.1 percent in 2011 to just 2.6 percent in 2023. However, when using higher income benchmarks, poverty remains widespread. The report noted that approximately 80 percent of India’s population still lived below the upper-middle-income poverty line of $8.3 per day in 2023.

The World Bank attributes the reduction in poverty primarily to strong consumption growth, increased employment opportunities—especially for women—and expanded social safety nets such as food subsidies. Despite these improvements, poverty remains heavily concentrated in rural areas and in a corridor of states stretching from Uttar Pradesh to West Bengal. In 2023, rural poverty stood at 19.3 percent compared with 8.6 percent in urban centers, underscoring the persistent regional disparities.

Madan Sabnavis, chief economist at Bank of Baroda, explained that two main factors have driven poverty reduction. The rise of e-commerce and quick-commerce services has created many jobs, albeit mostly low-skilled ones. At the same time, social welfare programs and free food provisions have increased household incomes, enabling more spending on non-food items.

Employment in India expanded significantly between 2017 and 2023, adding around 134 million workers—almost double the growth in the working-age population. Much of this surge came from rural women entering paid employment, which increased the number of earners per household. Nevertheless, this employment growth did not lead to substantial increases in real wages, as many new jobs are in lower-productivity sectors.

The report also highlights a rise in youth unemployment, which increased from 14.6 percent in the first quarter of fiscal year 2025-26 to 15.9 percent in the same quarter of 2026-27. The increase was particularly acute among young women in rural areas.

Sabnavis cautioned that sustainable poverty reduction depends on continued job creation. Without enough employment opportunities, reliance on cash transfers will persist. He pointed out that if such support were withdrawn prematurely, many families could fall back into poverty.

The World Bank also noted that recent poverty figures reflect a combination of genuine living standard improvements and changes in measurement methods. The surveys may underestimate inequality, as they might not fully capture consumption patterns among wealthier households.

India’s efforts to reduce poverty come amid broader economic and social transformations. The country’s demographic growth and expanding workforce create both opportunities and challenges. Ensuring inclusive growth, particularly by improving the quality of jobs and increasing wages, will be critical for maintaining momentum in poverty alleviation.

As India moves forward, policymakers face the task of addressing regional disparities, supporting rural employment, and enhancing social protection programs to safeguard vulnerable populations. The World Bank’s projections provide a hopeful outlook but also underscore the need for sustained economic and social reforms to achieve long-term poverty reduction.