India's Poverty Paradox: 500 Million Lifted Above Poverty Line, Yet Millions Still Struggle to Survive

Hema Prajapat, a 25-year-old resident of Rajsamand, describes the pain of hunger as more severe than "thorns growing inside her stomach." Despite her family's financial status appearing improved on paper, they face constant struggle. Hema spends approximately 11,000 rupees ($117) monthly for her household of three, which is 49 percent above the World Bank's poverty threshold of roughly 7,380 rupees ($78) for a family of that size.

India, the world's most populous nation, has not published official consumption-based poverty estimates in over a decade. Consequently, the World Bank provides internationally comparable estimates. A recent report from the World Bank indicates that India lifted nearly 500 million people out of poverty between 2011 and 2023, with extreme poverty falling from 27.1 percent to 2.6 percent. This massive reduction effort is comparable only to China's achievement of lifting over 800 million people out of extreme poverty over four decades.

While some economists view this as a significant achievement, others question the World Bank's conclusions and the Modi government's reluctance to conduct its own poverty estimates. The reality for millions of Indians is a life of persistent deprivation and precarity, where a single shock can push them back into poverty. Hema, who works as a caretaker and cleans houses, argues that the poverty line is too low to allow for a dignified life.

Despite being the fourth-largest global economy by nominal GDP, India remains one of the world's most unequal countries, with the top 1 percent owning 40 percent of the wealth. Hema's husband, Hari Prajapat, previously ran a street food stall selling pani puri, but the pandemic disrupted his business. Hema now earns 5,000 rupees ($53) a month cleaning houses, but rising prices have eroded their purchasing power.

The World Bank highlighted rising female labor force participation and the government's national food-security programme, which provides free or subsidized foodgrains to nearly 800 million citizens, as key factors in reducing extreme poverty. However, the rising cost of living—with consumer prices rising by at least 51 percent between September 2016 and September 2025—has outpaced wage growth.

Access to healthcare is another critical challenge. While state-run hospitals provide subsidized care, Hema was forced to use a private hospital for her son, Divyansh, due to long waiting times and crowded wards. The treatment cost 6,000 rupees ($64), more than her monthly salary.

Developmental economist Santosh Mehrotra in New Delhi argues that the poverty threshold is too low and fails to distinguish between rural and urban populations. He notes that "one shock"—such as a pandemic, drought, flood, or even a wedding—can push a family back into poverty. This was seen in the case of Sushila Salvi, whose maternal care at a private clinic cost 65,000 rupees ($695), draining her savings and forcing her to stop her daughter's extra tuition classes.

In New Delhi, Seema Kumar, who spends 20,000 rupees ($214) on her family of three, relies on loans during festivals or birthdays. Environmental shocks, such as the toxic smog during Diwali, have also taken a toll. Seema's family suffered from respiratory issues, yet she could not afford a mask for her son.

Back in Rajsamand, Hema continues to work to prevent her family from returning to extreme poverty, hoping her son, Divyansh, can build a better life.