Poverty and inequality in India - statistics & facts
Despite exponential economic growth, eradicating poverty has remained the mainstay of Indian politics even decades after independence. Recent data suggests that India has almost eradicated extreme poverty. But who is considered poor? While poverty is traditionally defined as the share of the people below the poverty line also called the head-count ratio, it may vary depending on country or region. However, measuring poverty is complex and lies in establishing a poverty threshold. There are a wide range of poverty estimates depending on differences in survey methodologies or the duration of time for the surveys.
The chorus for increasing the poverty line for India as the economy grows and the current one does not match India’s status as a lower-middle-income country. As per the revised poverty thresholds of the World Bank revised in 2025, around five percent of India's population lives on three U.S. dollars a day. At 4.20 dollars a day, a more representative threshold for lower-middle-income economies, almost 25 percent of India's population was considered poor.
The widely popular global multidimensional poverty index (MPI) is an international metric that considers several dimensions, and the intensity of deprivation experienced by poor households. MPI is measured using three dimensions, each weighing one-third: health, education, and standard of living. As per the latest estimates of the government’s think tank Niti Aayog, over 16 percent of the Indian population was multidimensionally poor.
In India, top 10 percent’s share in wealth was as high as 60 percent. A similar gap exists when incomes of the top 10 percent and bottom half of the population are compared. Income inequality ultimately leads to wealth inequality over a while. The inequality gap is also regional. Poverty remains concentrated in states with higher populations. As the inequality gap widens, Indians show low concern about the issue, as per a recent survey.
Since India opened its markets to foreign investment in 1991, its number of billionaires has surged. Asia’s two richest men are Indians. Forbes billionaire rankings show that the number of Indians with net wealth exceeding one billion dollars rose exponentially, whereas, minimum wages have barely increased over the years. The country aims to shift to a living wage in 2025 to solve the problem.
The generation of non-farm jobs, progressive taxation on income and wealth, and social expenditure on health, education, and insurance are some mammoth tasks the country needs to undertake to create a fair and equitable society. After all, subsidized grains can avert hunger, not poverty.
Measuring poverty
The official consumption-based poverty line for India was devised by the Tendulkar Committee in 2009. It pegged India’s poverty line at an expenditure level of 33 and 27 rupees per day for urban and rural areas respectively. Using the latest annual Household Consumption Expenditure Survey (HCES) data for 2023-24, a report by the State Bank of India in 2025 estimated that all-India poverty levels are between 4 and 4.5 percent, with extreme poverty nearly eliminated. The estimates were widely circulated in the country. This led to a flurry of counterclaims questioning the methodologies used for poverty estimation. It was also argued SBI estimates represent below-subsistence-level consumption in India.The chorus for increasing the poverty line for India as the economy grows and the current one does not match India’s status as a lower-middle-income country. As per the revised poverty thresholds of the World Bank revised in 2025, around five percent of India's population lives on three U.S. dollars a day. At 4.20 dollars a day, a more representative threshold for lower-middle-income economies, almost 25 percent of India's population was considered poor.
The widely popular global multidimensional poverty index (MPI) is an international metric that considers several dimensions, and the intensity of deprivation experienced by poor households. MPI is measured using three dimensions, each weighing one-third: health, education, and standard of living. As per the latest estimates of the government’s think tank Niti Aayog, over 16 percent of the Indian population was multidimensionally poor.
Surging inequalities
Poverty and inequality are inextricably linked. Estimates measuring inequality, such as the Gini Index, also vary across authorities such as the World Bank, World Inequality Lab or PRICE. India’s consumption-based Gini Index published by the World Bank shows reduced inequality at 25.5. The figures are, however, not comparable to other countries ranked based on income inequality. The consumption inequality as an index is usually lower than income inequality. The reason is that since the rich save a large part of their income, consumption, as unequal as it may be, appears more equal than income.In India, top 10 percent’s share in wealth was as high as 60 percent. A similar gap exists when incomes of the top 10 percent and bottom half of the population are compared. Income inequality ultimately leads to wealth inequality over a while. The inequality gap is also regional. Poverty remains concentrated in states with higher populations. As the inequality gap widens, Indians show low concern about the issue, as per a recent survey.
Since India opened its markets to foreign investment in 1991, its number of billionaires has surged. Asia’s two richest men are Indians. Forbes billionaire rankings show that the number of Indians with net wealth exceeding one billion dollars rose exponentially, whereas, minimum wages have barely increased over the years. The country aims to shift to a living wage in 2025 to solve the problem.
The generation of non-farm jobs, progressive taxation on income and wealth, and social expenditure on health, education, and insurance are some mammoth tasks the country needs to undertake to create a fair and equitable society. After all, subsidized grains can avert hunger, not poverty.
