International poverty line

Topic: Poverty and Inequality: Measurement and Policy · NCERT: Beyond NCERT

Meaning

The international poverty line (IPL) is the World Bank's global cut-off for extreme poverty. Anyone who lives on less than this amount per person per day, measured in PPP dollars (purchasing power parity dollars, which adjust for different price levels in different countries), counts as extremely poor. The current IPL is $3.00 a day at 2021 PPP, adopted in June 2025 [2].

• Why it matters: it is the only measure that compares extreme poverty across all countries on one common scale.
• It is the yardstick for SDG 1.1 (ending extreme poverty by 2030).
• Each time the World Bank adopts a new round of PPP prices, the line is reset. That changes how many people count as poor worldwide.

Formula (share of people who are poor): Headcount ratio (HCR) = (number of people below the line ÷ total population) × 100

Explanation

How the line is built

• Step 1: collect national lines. The World Bank takes the national poverty lines of 23 low-income countries (the poorest countries' own official lines) [2].
• Step 2: convert them to one currency. Each line is converted into 2021 PPP dollars.
• Step 3: take the middle value. The median (the middle value when all lines are put in order) came to $3.04. This was Burkina Faso's 2022 line, and it was rounded to $3.00 [2].
• The idea behind it: "extreme poverty" means being poor by the standards of the world's poorest countries. It is a minimum, not a comfortable standard of living.

Why PPP and not the market exchange rate

• PPP (purchasing power parity) is an exchange rate that makes money buy the same basket of goods in every country.
• Many goods and services, such as haircuts, food and local transport, are cheaper in India. So the PPP conversion factor for India is lower than the market exchange rate.
• Worked example (illustrative figures only):
• Suppose 1 PPP dollar buys in India what ₹20 buys.
• Then $3.00/day = 3 × ₹20 = ₹60 per person per day.
• Over a month: ₹60 × 30 ≈ ₹1,800 per person per month.
• If a person's MPCE (monthly per capita consumption expenditure, a household's monthly spending divided by its number of members) is below ₹1,800, that person is counted as extremely poor.

How the line has moved over time

Line	PPP base	Year adopted
$1.00/day	1985 PPP	World Development Report 1990
$1.25	2005 PPP	2008
$1.90	2011 PPP	2015
$2.15	2017 PPP	2022
$3.00	2021 PPP	June 2025

• What makes the line rise:
• new PPP prices, since each new ICP (International Comparison Program) round resets the conversion rates;

• poor countries raising their own national lines.

• Effect of the 2025 rise:

• about 838 million people were in extreme poverty in 2022 at $3.00;
• that is about 125 million more than earlier estimates, because the line went up [2];
• the extreme poor are more and more concentrated in Sub-Saharan Africa.

The higher lines for richer countries

• The $3.00 line is too low to be useful for middle-income countries. So the World Bank also reports two higher lines [2]:
• $4.20 for lower-middle-income countries (LMICs), up from $3.65 (a 15% rise);
• $8.30 for upper-middle-income countries, up from $6.85 (a 21% rise).

In India

• Who measures it: the World Bank applies the IPL to India. It uses consumption data from the Household Consumption Expenditure Survey (HCES), which is run by the NSO under MoSPI [1].
• Survey method change: India's data moved from URP (a 30-day recall for every item) to MMRP (7, 30 or 365-day recall, depending on the item). The World Bank revised India's poverty series to take this change into account [2].
• India's latest figures (World Bank, October 2025 brief):

Line	2011-12	2022-23
$3.00/day (extreme)	27.1% (about 34 crore) [3]	5.3% (about 7.5 crore; 75.24 million) [3]
$2.15/day (old IPL)	16.2%	2.35%
$4.20/day (LMIC line)	57.7% [3]	23.9% (about 34.2 crore) [3]

• Check the HCR: 7.5 crore ÷ about 143 crore × 100 ≈ 5.2%, which is close to the reported 5.3%.
• India is a lower-middle-income country, so the $4.20 line is also relevant for India. At that line [3]:
• Rural: 64.9% → 27.7% (2011-12 to 2022-23);

• Urban: 39.7% → 14.3%.

• Where the poor live: 46% of India's poor lived in Uttar Pradesh, Bihar and Maharashtra in 2022-23 [3].

• Why poverty fell: social transfers, such as subsidised food, and jobs growing faster than the working-age population since 2021-22 [3].
• Status check: a World Bank update in April 2026 may have revised these numbers (verify). The October 2025 brief still shows 5.3% at $3.00 [3].

Don't confuse with

• National poverty line (Tendulkar 2009 / Rangarajan 2014): India sets this line itself, in rupees. India currently has no official national line. The IPL is a World Bank line in PPP dollars, the same for every country.
• $4.20 LMIC line: this is not the extreme poverty line. It is a higher benchmark for lower-middle-income countries. India's figure is 23.9% at $4.20 but 5.3% at $3.00 [3].
• Multidimensional Poverty Index (MPI): this counts people who are deprived in health, education and living standards. It does not use spending or dollars. NITI Aayog's National MPI stood at 11.28% (2022-23) [4].
• Market exchange rate: the IPL is converted using PPP rates, not market rates. So ₹ per PPP dollar is lower than ₹ per US dollar.

Prelims Hooks

• The current IPL is $3.00 per person per day at 2021 PPP, adopted in June 2025. It replaced $2.15 (2017 PPP) [2].
• The $3.00 line is the median of the national lines of 23 low-income countries: Burkina Faso's line, $3.04, rounded down [2].
• Trap: $4.20 is the line for lower-middle-income countries and $8.30 for upper-middle-income countries. $3.65 and $6.85 were the old 2017-PPP values [2].
• India, extreme poverty at $3.00: 27.1% (2011-12) → 5.3% (2022-23). At the $4.20 line: 57.7% → 23.9% [3].
• Global extreme poverty: about 838 million people (2022) at $3.00, which is about 125 million more than under the old line [2].
• SDG 1.1 (end extreme poverty) uses the international line. SDG 1.2 ("halve" poverty) uses national definitions.

Mains Points

• Is India's poverty really near 5%?
• For: the World Bank's 5.3% at $3.00 matches rising MPCE and a falling Gini coefficient (a 0 to 1 measure of inequality) [1][3].
• Against:
  • the 2017-18 consumption survey was withheld, which leaves a data gap;
  • the move from URP to MMRP raises recorded spending, so part of the fall may come from the method itself;
  • India has no official national line to cross-check against.

• Balanced view: the direction of change is clear. The exact level depends on which line, which survey and which recall method are used.

• The level of the line changes the story.

• Extreme poverty is 5.3%, but 23.9% of Indians are below the $4.20 line [3].

• So policy should shift from ending destitution to reducing vulnerability: productive jobs, human capital, and help for lagging states such as UP and Bihar.

• Global lines and national lines can disagree (the NCERT Class 11 Pakistan example).

• Pakistan looked healthy on the international line, while its own national data showed poverty rising.
• GS-II link: India needs an official, revisable national poverty line and survey series with overlapping methods, so that real progress can be told apart from changes in method.

Related concepts

• Extreme poverty

Read more

• How poor is India now? HCES evidence and international poverty lines