Four in five Indians below ₹187 a day? What World Bank's poverty numbers reveal about household incomes

India has made significant progress in reducing extreme poverty, but a large proportion of its population remains economically vulnerable. While the share of Indians living in extreme poverty has declined sharply, World Bank estimates suggest that 57.7% of the population remained below a higher poverty benchmark of $8.30 per day in 2024.

A recent analysis shared by Markets by Zerodha has highlighted the contrasting picture emerging from India's poverty statistics, raising questions about how poverty is measured and whether escaping extreme deprivation necessarily translates into financial security.

The accompanying World Bank-based chart shows that nearly four in five Indians were below the higher poverty threshold in earlier years. Although that proportion has declined substantially, more than half the population remained below the benchmark in 2024.

What does ₹187 a day actually mean?

The World Bank uses different international poverty thresholds to assess living standards across economies.

Its $8.30-a-day benchmark, approximately ₹187 in 2021 purchasing-power-parity (PPP) terms as indicated in the chart, is designed to assess poverty relative to living standards in upper-middle-income economies.

Importantly, ₹187 is not a direct conversion of $8.30 using prevailing exchange rates. PPP adjusts for differences in the prices of goods and services across countries.

The benchmark measures daily consumption or income per person, rather than an individual's take-home salary.

This distinction matters because a household may have sufficient resources to escape extreme poverty while still struggling with healthcare expenses, education costs, housing and unexpected financial emergencies.

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Why do poverty estimates differ so sharply?

The chart shared alongside the Markets by Zerodha discussion presents three estimates for India in 2024:

0.4% of Indians below the $3-a-day extreme poverty threshold.

4% below the $4.20-a-day threshold.

57.7% below the higher $8.30-a-day threshold.

All three benchmarks are expressed in 2021 PPP dollars.

The wide differences illustrate how poverty estimates change depending on the standard used to assess economic deprivation.

Markets by Zerodha also cited a World Bank finding that India's extreme poverty declined from 27.1% in 2011 to 2.6% in 2024. However, this comparison should be assessed separately from the chart's estimates because the underlying poverty thresholds and methodologies may differ.

Why are economists debating the numbers?

Markets by Zerodha pointed out that India has not adopted an updated official domestic poverty line since 2014, complicating comparisons across different periods.

Another major concern involves changes in household consumption surveys.

Earlier surveys relied more heavily on single-visit expenditure reporting. Newer surveys use multiple visits and more detailed questions to capture household spending.

Research suggests that asking respondents about purchases more frequently can improve recall, potentially increasing reported consumption and lowering measured poverty rates even without equivalent increases in actual expenditure.

The absence of a comparable bridge survey using both methodologies makes it difficult to isolate the impact of these changes.

What does this mean for Indian households?

The findings underline an important distinction between poverty reduction and financial security.

Moving above the extreme poverty threshold does not necessarily mean a household has stable employment, adequate savings or sufficient protection against inflation and medical emergencies.

For India, the next challenge extends beyond reducing extreme deprivation to improving real incomes, employment opportunities and household resilience.

As Markets by Zerodha observed, lifting hundreds of millions out of extreme poverty represents a significant milestone. However, the higher poverty benchmark indicates that economic vulnerability remains widespread despite substantial progress.