From poverty alleviation to prosperity, Pg8

Key Highlights:

• India recorded one of the fastest extreme income-poverty declines globally, with an estimated 496 million people moving out of poverty between 2011 and 2023.
• Extreme income-based poverty ($3/day) in India declined to 2.6% by 2023, according to World Bank estimates.
• The share of the population living below the lower middle-income country line ($4.20/day) decreased significantly from 57.7% to 16.1% in the same period.
• The OPHI's Multi-dimensional Poverty Index (MPI) also showed a sharp reduction in overall poverty from 53.8% in 2005-06 to 16.4% in 2019-21.
• India's World Bank prosperity gap is 4.9, implying average consumption levels need to increase by this factor to reach the global benchmark of $28 per person per day.
• Approximately 80% of India's population currently falls below the upper middle-income poverty line of $8.30 per day.

India's Poverty Decline.jpg

Detailed Insights:

• India's progress in reducing extreme poverty is notable, but the article highlights the challenge of transitioning from poverty alleviation to widespread prosperity.
• The World Bank defines the prosperity gap as an indicator measuring how far a society is from a baseline standard of prosperity, set at $28 per person per day.
• A significant portion of India's population, about 64%, earns between $4.20 and $8.30 per day, contributing substantially to the high prosperity gap.
• For this segment, incomes would need to rise three to sevenfold to reach the desired standard of prosperity.
• India's labor market faces issues such as broadly flat real earnings and employment growth concentrated in low-productivity work.
• Youth unemployment reportedly rose from 14.6% to 15.9% between Q1 FY2026 and Q1 FY2027, as per the World Bank brief.
• The ILO India Employment Report 2024 indicated that around 90% of India’s workers were informally employed in 2022.
• The PLFS annual report 2025 showed only a marginal increase in regular wage work from 22.4% in 2024 to 23.6% in 2025.
• An increase in unpaid family helpers from 12.41% (2017-18) to 17.10% (2023-24) suggests distress-driven employment rather than opportunity.
• The India Employment Report 2024 revealed that educated young people accounted for approximately 65.7% of India’s unemployed youth in 2022, indicating a skills-jobs mismatch.
• Real wages for regular, salaried workers remained stagnant or declined between 2012 and 2022, as per the ILO India Employment Report 2024.
• Achieving prosperity requires tackling structural and institutional barriers to ensure better livelihoods, effective human capital building, and genuine economic opportunities.

Key Concepts Involved:

• Extreme Income Poverty: A measure indicating individuals living below a specific income threshold, typically $3 per day, used for least developed countries.
• Multi-dimensional Poverty Index (MPI): An international measure of acute poverty covering deprivations in health, education, and living standards.
• Prosperity Gap: An indicator developed by the World Bank to measure the distance a society has to cover to reach a baseline standard of prosperity ($28/day).
• Human Capital Markets: Refers to the ecosystem of private providers for education and healthcare services, where quality assessment can be challenging.