In today’s Finshots, we explain what it means when the World Bank raises the International Poverty Line (IPL) and if and how India helped curb the net rise in global poverty.

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The Story

A few days ago, the World Bank made a big move. It raised the International Poverty Line (IPL).

Now, if you’re wondering what that means, the poverty line is basically the minimum amount of money a person needs each day to meet basic needs like food, clothing and shelter. It’s a global benchmark to measure extreme poverty.

Earlier, this line was set at $2.15 a day. But after adjusting for inflation and changes in the cost of living, the World Bank has raised it to $3 per day.

Now, in theory, this should’ve pushed around 226 million more people globally below the poverty line.

But here’s the twist.

Only 125 million people were added to the tally of extreme poor, which is 101 million fewer than expected. The reason?

India.

Yup! India’s updated consumption data and better survey methods meant that the numbers looked dramatically different. When the World Bank factored in India’s new data, it turned out that far fewer people in the country were living in extreme poverty than earlier estimated. That alone offset a huge chunk of the global increase.

But does this mean that poverty around the world actually dropped, all because of India?

Well, to make sense of this, we need to go back to the basics.

Back in 1990, the World Bank introduced the IPL at $1 a day. It was a simple benchmark to measure extreme poverty in low income countries. Over the years, the line has been revised several times — in 2001, 2008, 2015, 2022 and now again, to reflect rising prices and the changing cost of basic needs.

And every time the poverty line is updated, the World Bank uses something called Purchasing Power Parities (PPPs). Think of PPPs as a tool to level the playing field. They help us understand how much something costs in one country compared to another. Like how far a dollar stretches in India versus the US. This makes global poverty numbers more comparable.

In the latest revision, the World Bank used new PPP data from 2021 and adjusted poverty thresholds across income levels. So for low income countries, the poverty line moved from $2.15 to $3 a day. For lower middle income countries, it shifted from $3.65 to $4.20. And for upper-middle income countries, it jumped from $6.85 to $8.40.

So, with higher thresholds, more people should technically be pushed below the poverty line. But like we said earlier, India was an exception.

And if you’re wondering how India pulled this off, well, it came down to a simple trick.

See, national poverty estimates rely heavily on household surveys — data collected on how much people spend on things like food, transport, rent and so on. But many developing countries don’t update these surveys often enough. India, too, was using outdated data for years. The last official household consumption survey was conducted way back in 2011–12.

That changed in 2023, when India released fresh survey data. This time, it also overhauled its methodology. The older method, called the Uniform Reference Period (URP), had limitations. It didn’t quite capture everyday spending accurately, especially for frequently purchased items.

The new method, called the Modified Mixed Recall Period (MMRP), fixed that. It used shorter time frames for items people bought more often. To put that in perspective, when surveys ask people how much they spent on frequently purchased items like vegetables, milk, or snacks, over a longer period, they may forget or guess, leading to inaccurate data. But if they’re asked to recall their spending over a shorter period, like just the past week, they’re more likely to remember it accurately. That’s what MMRP did. It also asked about a broader list of goods and services — 405 items instead of 347, including meals eaten outside the home, phone bills, housing repairs and more. This gave a more realistic picture of what people were actually spending.

And guess what?

When you record consumption more accurately, people don’t look as poor as they did earlier. That’s what happened in India.

Back in 2011–12, under the $3 poverty line, 27% of Indians or about 344 million people, were considered extremely poor. But by 2022–23, that number had dropped to just 5%, or about 75 million people. That’s a massive shift.

Also, a story by Livemint adds an important point here. India is a lower-middle income country. So while the $3 poverty line is the new global benchmark, a more appropriate one for India is $4.20 a day. Using that, around 24% of Indians were living in poverty in 2022. That’s still a big improvement from 28% under the old poverty line. And if we look back at 2011–12, nearly 58% of Indians were below that line. Sure, the old and new numbers aren’t perfectly comparable, but the overall direction is pretty clear. Poverty has dropped a lot.

That being said, no, India didn’t single handedly lift the world out of poverty. It’s basically revised data that offset what would have otherwise been a much larger global increase in poverty due to the raised threshold.

But we’d be wrong if we said that this was just a statistical adjustment.

India has also made real progress in reducing poverty through economic growth, government programmes and targeted welfare schemes.

Take states like Uttar Pradesh, Maharashtra, Bihar, West Bengal and Madhya Pradesh. In 2012, they accounted for 65% of India’s extreme poor. But by 2023, they also contributed to two-thirds of the total reduction in poverty.

That’s partly because of major welfare programmes rolled out over the past decade like PM Awas Yojana for affordable housing, PM Ujjwala Yojana for clean cooking fuel, Jan Dhan Yojana for financial inclusion and Ayushman Bharat for healthcare access. Systems like Direct Benefit Transfer (DBT) and digital services have also made it easier for the government to deliver benefits directly to people, without leakage.

Add to that the improved infrastructure in rural areas, rising wages and broader access to basic services, and you get a more complete picture of how poverty has fallen, not just on paper, but in real life.

So yeah, while some countries saw a rise in poverty after the new poverty line was introduced, India’s updated data helped soften the blow globally.

But the takeaway here is that up to date data matters. If countries rely on outdated surveys or flawed methods, they risk painting an inaccurate picture, both to themselves and to the world.

India’s experience shows what happens when you get the data right.

And maybe that’s the bigger lesson here. It’s not just about whether poverty went up or down. It’s about measuring it honestly and making sure the numbers reflect reality.

Because only then can the world track real progress and figure out who’s truly moving the needle.

Until then…

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