Sustaining progress

India needs to create jobs to further reduce poverty

The World Bank’s October 2026 “Poverty and Equity Brief” showed that the share of Indians living below the lower-middle-income poverty line of $4.20 a day (2021 purchasing power parity) fell from 57.7 per cent in 2011 to 16.1 per cent in 2023, lifting 496 million people above this threshold. Extreme poverty, measured at $3 a day, declined to 2.6 per cent. The poverty rate at the $4.20 threshold is projected to fall further, from 14.2 per cent in 2026 to 12.1 per cent in 2028. However, nearly 80 per cent of Indians remained below the upper-middle-income poverty line of $8.30 a day in 2023. The challenge is to move above the upper threshold as quickly as possible.

 

Between 2017 and 2023, an additional 134 million received employment, with the increase being nearly twice the expansion of the working-age population. Yet the real earnings remained broadly unchanged, reflecting the concentration of new jobs in relatively low-productivity activities. The median earnings among the top 10 per cent of workers were about 13 times those of the bottom 10 per cent in 2023. The rise in youth unemployment from 14.6 per cent in the first quarter of FY26 to 15.9 per cent in the corresponding quarter of FY27 is another warning. All this needs to change. Further reduction in the poverty level and an increase in income levels in general can happen only through rapid expansion in employment opportunities.

 

The structure of employment in the country will be central to this effort. Agriculture accounted for 43 per cent of employment in 2025, while manufacturing’s share was only 12.1 per cent, according to the Periodic Labour Force Survey (PLFS). This underscores the need to accelerate the shift towards more productive, better-paying non-farm jobs. Labour-intensive manufacturing, including textiles, apparel, footwear, food processing and electronics assembly, can absorb workers moving out of agriculture. Better infrastructure, industry-relevant skilling, easier access to credit, and predictable regulation can help firms expand and hire. Women’s participation is equally important. Although the female labour-force participation rate among those aged 15 and above was 40 per cent in 2025, as against 33.9 per cent in 2022, the urban rate remained much lower, at 27.7 per cent. The same rate among females in countries such as China and the United States is well over 50 per cent. Expanding women’s access to paid employment will require addressing barriers such as inadequate childcare facilities and unsafe transport, alongside more flexible work arrangements. An International Labour Organization study covering 82 countries estimated that every dollar invested in closing childcare gaps could generate $3.76 in global gross domestic product by 2035.

 

The geographical concentration of poverty makes state-level action crucial. Uttar Pradesh, Bihar and West Bengal account for about 57 per cent of India’s poor population, according to the World Bank. Rural poverty, at 19.3 per cent, remains considerably higher than urban poverty, which is at 8.6 per cent. States with high poverty levels must compete to attract investment and generate stable, better-paying jobs. The Union government must focus more on these states to ensure equitable growth in the country.