World Bank’s Poverty and Equity Brief 2025

Syllabus: Governance and Reports

Source: WB

Context: The World Bank’s Spring 2025 Poverty and Equity Brief acknowledged India’s success in lifting 171 million people out of extreme poverty between 2011-12 and 2022-23.

Summary of World Bank’s Poverty and Equity Brief:

• Purpose: Published twice a year, these briefs track poverty, shared prosperity, and inequality trends in over 100 developing countries.

• India’s Highlights: Extreme poverty (living under $2.15/day) declined from 16.2% (2011-12) to 2.3% (2022-23). Lower-middle-income poverty (living under $3.65/day) fell from 61.8% to 28.1%, lifting 378 million people. Multidimensional poverty declined from 53.8% (2005-06) to 15.5% (2022-23). Inequality reduction: Gini index improved from 28.8 to 25.5. Employment Growth: Urban unemployment dropped to 6.6%, the lowest since 2017-18.

• Extreme poverty (living under $2.15/day) declined from 16.2% (2011-12) to 2.3% (2022-23).

• Lower-middle-income poverty (living under $3.65/day) fell from 61.8% to 28.1%, lifting 378 million people.

• Multidimensional poverty declined from 53.8% (2005-06) to 15.5% (2022-23).

• Inequality reduction: Gini index improved from 28.8 to 25.5.

• Employment Growth: Urban unemployment dropped to 6.6%, the lowest since 2017-18.

Factors Leading to Poverty Decline:

• Welfare Schemes: Programmes like PMAY, MGNREGA, Ujjwala Yojana expanded safety nets (e.g., 11 crore households received LPG under Ujjwala).

• Economic Reforms: GST, Ease of Doing Business reforms accelerated formal sector growth, boosting employment opportunities.

• Access to Essentials: Initiatives like Ayushman Bharat and Jan Dhan Yojana improved healthcare and financial inclusion.

• Rural Development: Increased road connectivity under PMGSY and rural electrification enhanced rural income and access to markets.

• Women Empowerment: Rise in rural female employment and SHG-based entrepreneurship expanded family incomes.

Analysis of Report:

• Positives in Report:

• Broad-Based Gains: Both rural and urban poverty declined significantly, closing the rural-urban gap from 7.7% to 1.7%. Employment Upsurge: Female employment witnessed a notable rise; self-employment surged among rural women. Inclusive Development: States like Uttar Pradesh, Bihar, Maharashtra contributed heavily to national poverty reduction. Inequality Reduction: Improved Gini index indicates wealth distribution becoming more equitable.

• Broad-Based Gains: Both rural and urban poverty declined significantly, closing the rural-urban gap from 7.7% to 1.7%.

• Employment Upsurge: Female employment witnessed a notable rise; self-employment surged among rural women.

• Inclusive Development: States like Uttar Pradesh, Bihar, Maharashtra contributed heavily to national poverty reduction.

• Inequality Reduction: Improved Gini index indicates wealth distribution becoming more equitable.

• Negatives in Report:

• Youth Unemployment: Despite overall employment gains, 13.3% youth unemployment remains concerning, reaching 29% among graduates. Informal Employment: Only 23% of non-farm jobs are formal; agriculture still remains largely informal. Gender Disparity: Despite improvements, women’s labour force participation remains at 31%, highlighting persistent inequality. Poverty Pockets: Five populous states still account for 54% of India’s extremely poor in 2022-23.

• Youth Unemployment: Despite overall employment gains, 13.3% youth unemployment remains concerning, reaching 29% among graduates.

• Informal Employment: Only 23% of non-farm jobs are formal; agriculture still remains largely informal.

• Gender Disparity: Despite improvements, women’s labour force participation remains at 31%, highlighting persistent inequality.

• Poverty Pockets: Five populous states still account for 54% of India’s extremely poor in 2022-23.

Way Ahead:

• Skill Development Focus: Massive upskilling and vocational training for youth to address educated unemployment.

• Strengthen Formal Sector: Labour reforms and MSME strengthening can shift employment towards formal, secure jobs.

• Targeted State Interventions: Special poverty eradication missions in high-burden states like Bihar and Uttar Pradesh.

• Promote Rural Non-Farm Economy: Diversifying income sources through rural industries, agri-tech, and services to ensure sustainable rural incomes.

• Address Gender Gap: Policies encouraging women’s workforce participation through safer workplaces and flexible working models.

• Enhance Safety Nets: Strengthening schemes like PM-Kisan and Ayushman Bharat for last-mile delivery and impact.

Conclusion:

India’s achievement in lifting 171 million people out of extreme poverty over a decade is historic and globally significant. The World Bank’s recognition reflects India’s policy-driven approach to inclusive growth. Continued reforms, targeted interventions, and empowering the informal sectors will be key to sustaining this momentum toward a poverty-free India.

• Critically examine whether growing population is the cause of poverty OR poverty is the main cause of population increase in India. (UPSC-2015)