Fairness, churn, and India's rise: India has lifted millions out of poverty, but the next big challenge is helping people climb further

Between 2011-12 and 2023-24, the share of Indians living below $4.20 a day fell from 57.7% to 16.1%. About 496 mn people moved above the lower-middle-income poverty line. Extreme poverty, measured at $3 a day, fell from 27.1% to 2.6%. World Bank's October 2026 'Poverty and Equity Brief' counts this among the fastest poverty declines anywhere. Few countries have lifted so many people in so short a time.

The report notes that India added about 134 mn jobs between 2017 and 2023, nearly twice the growth of its working-age population. More rural women entered the workforce, raising household earnings. Food subsidies and social transfers helped too.

Much of the new work is in low-productivity activities, and real wages have risen slowly. Nearly 4 in 5 Indians still live on less than $8.30 a day. Crossing the poverty line is the first step. Climbing well beyond it is the next.


A 2016 World Bank study of 121 countries, 'Growth still is good for the poor', found that incomes of the poorest fifth tend to rise in step with average incomes. In India, a 2016 study, 'Why did poverty decline?' traced much of the poverty reduction between 2005 and 2012 to rising unskilled wages and a shift into non-farm work. Transfers played a smaller part.

A 2020 study, 'Growth, Urbanization, and Poverty Reduction in India', found poverty fell faster after 1991, even as inequality rose, because growth and urban expansion lifted rural incomes. Rising inequality and falling poverty can coexist. A measure that records only the first will miss the second.

Yet, much of the economic debate has moved the other way. A 2018 study, 'Distributional National Accounts: Methods and Estimates for the United States', made the top 1% income share a headline measure of economic performance. Emmanuel Saez and Gabriel Zucman's 2019 book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, places progressive taxation at the centre of tax justice.

Concern about inequality is legitimate. Difficulty arises when inequality is treated as a sufficient diagnosis of economic failure, redistribution as its natural remedy. Policy then narrows to dividing what exists, rather than enlarging it.

The step from measuring inequality to taxing wealth is harder still. A 2024 proposal by Gabriel Zucman envisages a minimum tax equal to 2% of billionaires' wealth, raising $200 bn to $250 bn a year. That estimate rests on an assumption that the rich will not do much to shrink the base on which the tax falls.

Evidence suggests otherwise. A 2022 study of Swiss cantons, 'Behavioral Responses to Wealth Taxes: Evidence from Switzerland', found that a 1-point cut in wealth tax rates raised reported wealth by at least 43% over 6 yrs. Run in reverse, a higher tax shrinks reported wealth just as sharply. Very little of this came from people saving more or less. It came from moving residence, revaluing assets and changing what they report.

If billionaires respond even partly in this way, the revenue from a 2% tax will be well below Zucman's projection. Before it is adopted, a wealth tax should show that it can raise money at a reasonable cost, and that it does so better than other ways of taxing the rich.

There is a deeper limit to the inequality lens. A top income share is a snapshot that shows how income is divided in a given year, not who stands on each rung, or whether they stay there. A society where the same families hold the top for generations, and one where positions change hands every decade, can share the same Gini coefficient. They are not equally fair.

A F Shorrocks' 1978 study, 'The Measurement of Mobility', showed that mobility makes lifetime incomes more equal than any single year would suggest. A 1973 study, 'The Changing Tolerance for Income Inequality in the Course of Economic Development', described a 'tunnel effect'. Drivers stuck in traffic feel hopeful when the next lane starts moving, because they expect their turn to come. People accept others getting ahead when they believe the road is open to them too.

The better question is not how unequal a country is, but how open it is.

For India, the answer is encouraging. Real growth since the pandemic has been creditable. IMF expects India to remain the fastest-growing major economy. Opportunity has also spread well beyond familiar names and big cities. The Axis Bank and Hurun India list of the 500 most valuable private companies now spans 50 cities, from Rajkot and Bikaner to Kumbakonam and Rajnandgaon. Over the past 5 yrs, the broad BSE 500 index has outpaced the 30-stock Sensex by about 3 percentage points a year.

About half of India's 2 lakh recognised startups come from tier-2 and -3 cities. More than 7.8 cr enterprises had registered on the Udyam platforms by early 2026, up from under 80 lakh in 2021-22. These firms are also getting paid on time. Invoices discounted on TReDS platforms rose from about ₹40,000 cr in 2021-22 to ₹3.47 lakh cr in 2025-26.

This matters because mobility pays. The 2018 study, 'Intergenerational mobility, human capital accumulation, and growth in India', covering state-regions from 1983 to 2011, found that greater mobility led to higher later consumption growth, especially among the poor. Public policy can build on this momentum by aiming at fairness and churn.

Fairness means rules applied evenly, bills paid on time, and fair returns to both labour and capital. Churn means children can do better than their parents, new firms can challenge old ones, and no position is a permanent title. Good schools and healthcare, easy entry for enterprise and working land, and credit markets serve these ends better than a new levy on wealth.

Poverty figures show how far India has come. Mobility shows how far it can go.

Nageswaran is CEA, GoI. Jain is director, Arrjavv. Views are personal