Extreme poverty in India halved to 2.6% in 2023 from a year ago, shows the World Bank’s latest ‘Poverty & Equity Brief’.This measurement uses a $3-per-day poverty line. If one uses the Lower Middle-Income Country threshold of $4.2-per-day, the decline was from 23.9% to 16.1%. Whichever way one looks at it, these are significant declines.The World Bank also estimates that the poverty rate, as per $4.2-per-day threshold, fell further to 14.2% in 2026 and may fall to 12.1% by 2028. These figures will be updated as labour market and macroeconomic data are revised or new numbers become available. But the projected decline in the poverty rate — by 2028 and beyond — hinges on a key development: India’s poorest states creating productive jobs. The World Bank noted that youth unemployment has increased over the past year to 15.9%, and real earnings have not moved much.The ‘feeling’ of growthTo be sure, India has been posting rather impressive growth rates, with the 7.8% expansion of the GDP in the April-June quarter besting nearly all forecasts. And yet, questions have been raised about this rapid growth not being “felt” on the ground.This isn’t unique to India, with the International Labour Organization (ILO) wondering a couple of weeks ago why life is “becoming harder to afford despite economic growth?” According to ILO Chief Economist Sangheon Lee, the relationship between higher productivity and wages has been weakening: globally, the share of income going to labour declined from around 54% in 2004 to 52.6% in 2025.ExplainSpeaking | Will the Indian economy’s size triple in next 10 years?Government officials privately acknowledge the tough road that lies ahead, warning that India’s demographic dividend cannot be taken for granted.Story continues below this ad“Our biggest problem is that we think demographic dividend is a tailwind for India. With social media, smartphones, and now AI affecting cognitive skills, ability to concentrate and read 10 pages at a time, and the impact on mental, physical, and social health, the question is whether the demographic dividend can be taken for granted. Probably not,” a government official said.“Today’s ageing countries, when they were having demographic tailwinds, they did not have to worry about all these things, say till about 2000.”A new BIMARU?The World Bank estimates that 57% of India’s poor now live in a “contiguous belt stretching from Uttar Pradesh to West Bengal”.This is not particularly new information.Graphs, Data, Perspectives | How India’s growth rate keeps beating forecastsMore than 40 years ago, the term BIMARU was coined by the late demographer Ashish Bose to describe the economically “sick” states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. The World Bank’s latest warning seems to suggest Rajasthan may have been replaced by West Bengal. Madhya Pradesh and Bihar, back then, were undivided.The World Bank did not provide state-wise poverty rates.Unofficial poverty lineStory continues below this adLuckily, a Reserve Bank of India (RBI) staff paper last year updated India’s last official poverty line, set by a committee led by former central bank governor C Rangarajan.The Rangarajan poverty line had caused a stir in 2014 when it estimated the national poverty line at Rs 1,407 in terms of monthly per capita expenditure for urban areas and Rs 972 for rural areas. What this meant was that anyone spending more than Rs 47 per day in urban areas or Rs 32 per day in rural areas was not poor. This led to India’s poverty rate being pegged at 29.5%. The updated, unofficial poverty lineSo, when RBI economists updated the Rangarajan line for 20 major states using the 2022-23 Household Consumption Expenditure Survey, the results were striking.In rural areas, the states with by far the highest poverty rates were Chhattisgarh (25.1%) and Jharkhand (16.6%). Rural Madhya Pradesh was fourth (9.6%), West Bengal seventh (7.5%), Bihar ninth (5.9%), and Uttar Pradesh 11th (5.7%).Story continues below this adAlso Read | Who is poor in today’s India? What an updated Rangarajan poverty line looks likeThe results were slightly more telling for urban areas. Chhattisgarh again had the highest poverty rate (13.3%), followed by Jharkhand (12.6%), West Bengal (12.4%), and Madhya Pradesh (11.6%). Uttar Pradesh was sixth (9.9%) and Bihar seventh (9.1%).It was not all bad news for these states, because they had recorded huge declines in poverty levels between 2011-12 and 2022-23. For instance, the fall in poverty in urban Bihar was the highest of any state, from 50.8% in 2011-12 to 9.1% in 2022-23.A new reckoningWhile the World Bank noted that employment increased by 13.4 crore between 2017 and 2023 — nearly twice the increase seen in the working-age population — the problems are apparent too.The advent of artificial intelligence and high youth unemployment rates mark a new challenging phase that India enters while targeting developed status by 2047 (as an aside, as per the World Bank’s poverty line of $8.3-per-day for Upper Middle Income countries, India’s poverty rate in 2023 was 80%).Story continues below this adThe signs of the challenge for the Uttar Pradesh-to-West Bengal states are apparent. Consider the following facts:* Wages of factory workers in Jharkhand declined 5.2% in 2024-25 against a 5.3% all-India rise. It was the only state to see a fall in wages.* In 2025, 81% of districts in Bihar – the highest in the country – had more than a quarter of all youngsters aged 15-29 were neither employed nor in education or training. West Bengal was second at 75%, with Uttar Pradesh not far behind at 69%.This is not to say these states aren’t making progress; Uttar Pradesh, for instance, saw the largest increase (12.8%) in the number of factories in 2024-25.Story continues below this adThe government knows that we are now living in an age that is less forgiving of policy errors than previous ones. So, it has to not only get its decisions right but also, probably, to get them right at the first time of asking.