India Cut Extreme Poverty to 2.6%, Says World Bank — So Why Does a 13x Wage Gap Remain?

In twelve years, India did something few large economies have managed: it cut extreme poverty by roughly nine-tenths. According to the World Bank's October 2026 Poverty and Equity Brief, released on October 30, the share of Indians living in extreme poverty fell from 27.1 percent in 2011 to 2.6 percent in 2023. But the same brief carries a second headline that complicates the celebration: in 2023, the typical worker in the top 10 percent earned about 13 times as much as the typical worker in the bottom 10 percent. Poverty collapsed, yet the pay ladder barely moved. How can both be true at once?

One clarification first: the 2.6 percent figure describes 2023, the latest survey year in the brief — not this month. The story is about a twelve-year transformation that has only now been fully measured, and about what it did not fix.

The numbers behind the fall

The headline numbers are striking by any standard. Extreme poverty means living on less than $3 a day at 2021 purchasing power parity; on that measure, India went from more than one in four people to roughly one in forty.

At the broader lower-middle-income poverty line of $4.20 a day, the fall is even larger in human terms: from 57.7 percent of the population in 2011 to 16.1 percent in 2023, lifting an estimated 496 million people above that line. The World Bank called it one of the fastest poverty declines in the world, and the improvement shows up beyond income too: multidimensional poverty, which counts deprivations in health, education and living standards, fell from 53.8 percent in 2005-06 to 16.4 percent in 2019-21.

The Bank credits three drivers above all: strong growth in household consumption, rising employment — particularly among women — and expanded social transfers, including food subsidies. In other words, more people earned, and the safety net caught more of those who did not.

The 13x gap that did not close

So why does the wage gap look so stark? The 13-times figure compares median earnings — the middle earner in each group — between the highest-earning tenth of workers and the lowest-earning tenth in 2023. It is a measure of the labour market, not of household living standards, and that distinction matters.

On consumption, which is what transfers and subsidies directly support, inequality actually narrowed: the Gini index for consumption expenditure fell from 28.78 in 2011 to 23.0 in 2023. Food subsidies and other transfers can lift what a family consumes even when its earnings stay low. But they do not change the structure of work itself — and that structure is where the gap lives: informal jobs, low-productivity work and uneven access to stable, salaried employment.

The Bank adds two cautions: surveys may miss top-end consumption, so inequality could be understated; and remaining poverty concentrates among households with less education, fewer assets and little stable employment — the hardest group for broad growth to reach.

What happens next

The brief projects the decline will continue, but more slowly: poverty at the $4.20 line is expected to fall from 14.2 percent in 2026 to 12.1 percent by 2028. Those are indicative microsimulation projections, the Bank stresses, not promises.

The slower pace is the point. The first phase rode on growth plus transfers, which lifts millions at once. The next phase is about job quality: whether bottom-ladder workers move into steadier, better-paid work, or transfers keep bridging a gap wages alone do not close. Subsidising consumption can continue for a long time; closing a 13-to-1 earnings gap needs different change — in skills, formal employment and productivity.

India's achievement is real — 496 million people above a poverty line is not a statistical quirk, and the fastest-decline label is earned. But the World Bank's brief is best read as two stories, not one: a poverty story that is largely one of success, and a wage story that is still waiting for its turning point. The 2.6 percent tells the world how far India has come. The 13 times tells it what is left to do.

Read next: Pakistan Imports From India Surge 69% Despite Trade Ban: How Are Indian Goods Reaching Islamabad? · US GDP Grows 3.4% in Q3 2026: AI Investment and Consumer Spending Beat Forecasts

Sources: The Hindu BusinessLine on the World Bank brief · The Economic Times (PTI) on the World Bank brief