Poverty low, expectations high: India’s next challenge is creating jobs and driving reforms

Is the government a victim of its own success? World Bank says that poverty, defined as living on less than $4.20 a day, has declined in India from almost 58% to 16% between 2011 and 2023. This is likely to fall further to 12% by 2028. Extreme poverty, defined as living on less than $3 a day, is down from 27% to 2.6%.

Credit for taking almost 500 mn people out of poverty goes to the government. But beyond the credit lie heightened expectations. India is no longer poverty-stricken. It's now impatient to be rich. GoI has delivered high growth. But India has maintained a healthy growth rate since 1991. Growth alone doesn't guarantee elimination of poverty. It must reach the last mile. And that takes time.

The Modi government overhauled delivery of welfare, which has improved living standards. The most important dimension of this was DBT, courtesy of JAM. Building of toilets through Swachh Bharat Mission helped alleviate public health risks and enabled individuals to lead more productive lives.


Cheap gas cylinders empowered women. Subsidised food for 800 mn people helped eliminate extreme poverty. It also enabled a better-fed population to use their labour more productively, thereby enhancing their incomes. Subsidised health insurance under Ayushman Bharat ensures that families don't plunge into poverty when one member of the household faces a health crisis. PM Awaas Yojana provided funds for building roofs over the heads of poor households.

While many such schemes existed even before, it's only during the tenure of the present government that proper delivery of these schemes has taken place. No surprise, then, that poverty is down and extreme poverty is virtually eliminated. Also, GoI's focus on building infrastructure, particularly better roads, has improved connectivity and brought access to markets and opportunities closer to people living outside metropolitan areas.

People who were mired in poverty have now moved into the aspirational classes. The next step for these 500 mn is to enter the middle class. Right now, India is in the zone above poverty but below prosperity.

The road ahead requires GoI to continue with reforms. While improving welfare was within the government's control, creating good jobs is the task of entrepreneurs. Unleashing their animal spirits is the government's job.

GoI is serious about market reform. Several big measures have, however, faced pushback from either the Opposition (e.g., land acquisition reform) or the citizenry (e.g., farm laws). It's ironic that those who criticise the government for not creating enough opportunities (employment or entrepreneurship) are also those who oppose measures required to break through into the league of prosperity.

GoI must stick to its conviction on reform and accelerate the pace of change. The global environment - geopolitically or technologically - is challenging and changing very rapidly. This is the time for great agility and speed.

If critics have better ideas to create jobs and raise incomes (and not simply more freebies), they should put them on the table. Nothing can be better than a national consensus on the policy areas needed to at least double India's per-capita income in the quickest time.