India's Gini Index stands at 25.5, positioning it as the 4th most egalitarian nation globally.
India's economic landscape has undergone a significant transformation in recent years, with the government's targeted initiatives playing a crucial role in promoting financial inclusion, reducing poverty, and fostering income equality.
Programmes such as PM Jan Dhan Yojana, Aadhaar, Direct Benefit Transfer (DBT), Ayushman Bharat, Stand-Up India, Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), and PM Vishwakarma Yojana have collectively contributed to this progress.
The PM Jan Dhan Yojana (PMJDY), launched to promote financial inclusion, has greatly increased access to banking in rural and marginalised areas. With nearly 100% village coverage within 5 km, the number of zero-balance accounts has decreased significantly, from 8.52 crore to 4.26 crore between 2015 and 2024. The average deposits in PMJDY accounts have grown over fourfold during this period, empowering millions, particularly women, by providing access to savings, credit, insurance, and pensions.
Aadhaar, acting as a unique digital identity, enables efficient identification of beneficiaries and prevents duplication and fraud. Its integration with DBT ensures subsidies and social security payments are accurately targeted, increasing transparency and reducing corruption.
DBT has been a cornerstone in plugging subsidy leakages by transferring benefits like LPG subsidies, pensions, and welfare payments directly into recipients’ bank accounts, leveraging Aadhaar for authentication. This system has improved delivery efficiency and financial empowerment for lower-income groups, promoting inclusive growth and better utilization of state resources.
Ayushman Bharat (Pradhan Mantri Jan Arogya Yojana - PMJAY) provides health insurance coverage up to ₹5 lakh per family annually, benefiting over 50 crore Indians, especially the poor. By covering catastrophic health expenses, Ayushman Bharat reduces out-of-pocket expenditure, prevents medical impoverishment, and improves overall health outcomes—a critical factor in sustained poverty alleviation.
Stand-Up India facilitates entrepreneurship among women and marginalized communities by providing bank loans between ₹10 lakh and ₹1 crore to start new ventures. It promotes income equality by enabling access to credit for business startups in SC/ST and women entrepreneurs, expanding livelihood opportunities.
Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) ensures food security by distributing free grains to the poor, especially during crisis times like the COVID-19 pandemic. By safeguarding nutritional intake, it directly supports poor households and reduces vulnerability to hunger and malnutrition, critical components of poverty reduction.
PM Vishwakarma Yojana focuses on skill development and entrepreneurship promotion among artisans, craftsmen, and small business owners in traditional sectors. It fosters sustainable livelihoods by upgrading skills and providing financial support, thereby improving income levels of those in informal and semi-formal economic activities.
These initiatives have had a profound impact on poverty reduction and income equality in India. According to the World Bank and other sources, India’s extreme poverty rate plummeted from 27.1% in 2011–12 to 5.3% in 2022–23, lifting over 269 million people out of extreme poverty, a historic achievement globally.
The rural extreme poverty rate dropped drastically from 18.4% to 2.8%, and urban poverty from 10.7% to 1.1% in the same period. These initiatives contributed to improvements across multiple dimensions of poverty, including education, health, sanitation, and housing, as reflected in the Multidimensional Poverty Index (MPI) decrease from 53.8% in 2005-06 to 15.5% in 2022-23.
India's success in reducing poverty is closely linked to its government's targeted initiatives, which aim to promote economic progress and social protection. The country's progress towards greater income equality is backed by these focused government initiatives, making it one of the most equal societies today, with a Gini Index of 25.5, placing it fourth in the world.
The World Bank's revised extreme poverty threshold is $3.00 per day. Under this threshold, the 2022-23 poverty rate in India would be adjusted to 5.3%. The government's initiatives are credited with India's ability to balance economic reform with strong social protection, making it a model for other developing economies.
- The increased access to banking through PM Jan Dhan Yojana has fostered wealth and business opportunities, particularly for women, by providing them with access to savings, credit, insurance, and pensions.
- The Direct Benefit Transfer (DBT) system, integrated with Aadhaar, has targeted finance towards education and self-development by minimizing corruption and ensuring accurate disbursement of subsidies and welfare payments, thereby empowering lower-income groups.
