In a landmark achievement, India has nearly eradicated extreme poverty, with only 1% of households falling below the international poverty line in 2024, according to a recent analysis of government survey data. This remarkable progress marks a significant milestone in the country’s development journey and challenges long-held assumptions about the role of industrialization in poverty alleviation.
From Deprivation to Prosperity
Three decades ago, India’s poverty landscape was starkly different. In 1995, nearly half of India’s population lived below the international poverty line, then set at 1.08 a day (now adjusted to 2.15 at purchasing-power parity). Villages were marked by mud huts, primitive farming tools, and widespread deprivation. Ram Dass, a villager from northern India, recalled the hardships of his youth, working long days for meager wages and struggling to afford even basic necessities like quilts or shoes.
Fast forward to 2024, and the story has transformed. The latest survey data, analyzed by Surjit Bhalla, a former executive director of the IMF, and Karan Bhasin of the State University of New York, Albany, reveals that extreme poverty in India has plummeted to just 1%. This achievement underscores the country’s success in lifting hundreds of millions out of destitution over the past three decades.
A New Path Out Of Poverty
India’s progress challenges the conventional wisdom that poverty eradication requires a manufacturing boom and mass migration from farms to factories. Surprisingly, more than 40% of India’s workforce remains employed in agriculture, yet poverty has declined dramatically. This suggests that people can escape poverty without leaving the land, thanks to improvements in rural wages, crop yields, and landholdings.
A new study by economists Vincent Armentano, Paul Niehaus, and Tom Vogl from the University of California, San Diego, supports this finding. Their research, which tracks generational progress in five emerging economies—China, Indonesia, Mexico, South Africa, and India—shows that poverty reduction often occurs within rural communities. For instance, in India, many families escaped poverty through modest improvements in agricultural productivity or by benefiting from rising rural wages driven by urban migration.
Generational Progress
The study also highlights how each generation in India has fared better than the last. Ram Dass, for example, moved to Mumbai in his youth, working in dyeing factories and saving enough to buy land in his village. His eldest son, educated and employed as a state school teacher, represents the next step in this upward trajectory. “I’ve tried to ensure that the children develop as much as they can,” the son told writer Siddharth Dube, as reported in The Economist. “Their future should be better than what I have lived.”
This generational progress is a testament to India’s investments in education, nutrition, and rural development. While older generations improved their lives through hard work and migration, younger generations are benefiting from better opportunities and higher aspirations.
With extreme poverty now affecting just 1% of the population, economists argue that the $2.15 international poverty line has outlived its usefulness. Bhalla and Bhasin recommend adopting a higher poverty threshold to capture the bottom quarter or third of the population. While these individuals may no longer lack basic necessities like food, clothing, or shelter, they still face financial hardships, such as medical expenses or education costs.
A Bright Future Ahead
India’s success in reducing extreme poverty is a cause for celebration, but it also highlights the need for sustained efforts to address broader economic disparities. The country’s experience demonstrates that poverty eradication does not always require industrialization; instead, it can be achieved through a combination of rural development, education, and generational upliftment.
As India continues its journey toward prosperity, the dreams of millions—like Ram Dass and his family—serve as a powerful reminder that progress is possible, even in the absence of a manufacturing miracle. With continued focus on inclusive growth, India’s future looks brighter than ever.
(With inputs from The Economist)
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