Eliminating Extreme Poverty: Kerala’s Lessons for Developing ASEAN Countries

When the Chief Minister of India’s Kerala state announced on 1 November 2025 that the state had eliminated extreme poverty, it came as a surprise to many. While a valid debate over issues of definition and measurement ensued, even sceptics recognised that Kerala had removed severe destitution by addressing nutritional, health and educational needs. The focus quickly shifted to how a lower middle-income economy, nestled within a country with the highest number of the world’s poor or near-poor, could have achieved this, and what lessons it holds for developing countries, including those in ASEAN.

Poverty incidence, however measured, has fallen sharply over the years throughout ASEAN. But they remain disturbingly high in the least developed countries (LDCs) of Cambodia, Laos, Myanmar and Timor-Leste (Table 1). The number of poor or near-poor is still high in the populous, middle-income countries of Indonesia, the Philippines and Vietnam. Even in the more affluent Thailand and Malaysia, regional disparities are stark, with some regions punctuated by pockets of poverty.

Kerala, like many Southeast Asian economies, faces daunting developmental problems. Amidst this context, some of Kerala’s experience is textbook. According to one estimate, Kerala’s poverty rate in 1973-74 was 59.8 per cent. When poverty is that high, it can only be brought down by economic growth. Kerala grew at a healthy annual average of 6-7 per cent over the last two decades. Between 2000-2020, ASEAN grew at an annual average of about 5 per cent, while the LDCs averaged between 7-8 per cent, bringing poverty rates down sharply. But poverty remains unacceptably high (Table 1).

The Kerala experience demonstrates that very high economic growth rates, similar to those in China, are neither necessary nor sufficient for eliminating poverty. China grew at an annual rate of 9 per cent for four decades, lifting more than 800 million out of poverty. While robust economic growth is required to bring poverty down from initially high rates, the poverty elasticity of growth (how much poverty rates fall for a given increase in income) starts to decline at lower levels of poverty incidence. Those who remain poor despite years of strong growth can only be uplifted through other means.

The Kerala story suggests that targeted measures tailored to the specific circumstances facing the persistently poor are required. First, the authorities need to identify the seemingly “invisible” poor. To find those that have slipped through the cracks requires active grassroots monitoring systems with community participation led by local governments. Once identified, a well-developed social infrastructure capable of rapid response must be in place. The provision of basic needs, especially food and medical care, is critical. Although fiscal resources are required to support such a social ecosystem, Kerala reveals that modest means need not be a constraint when priorities are set right.

Kerala’s lesson is that getting rid of extreme poverty is not a one-shot exercise; it needs to be both sustainable and resilient. Sustainability requires that the protected are eventually weaned off support programmes through gainful employment, thus ensuring self-reliance. ASEAN needs to improve its domestic investment climate to support employment generation locally. Unlike ageing Kerala, the poorest countries in ASEAN have relatively young populations, but realising the demographic dividend requires job creation. Like Kerala, many ASEAN countries face a significant youth unemployment problem, likely to be exacerbated by technological change. Currently, the Philippines and the LDCs rely heavily on exporting labour, but this is getting risky with the rise in protectionism. Exporting a country’s greatest resource – its people – is not a worthy or sustainable long-term development strategy.

Protectionism, like technological and climate change, disproportionately impacts the poor, because of vulnerabilities linked to occupation, location, and capacity to adapt to change. The large numbers of near-poor that hover above the poverty line could easily be pushed below it unless growth is more resilient to these megatrends and economic or other shocks. And when these impacts or shocks inevitably take hold, active monitoring with community participation and rapid-response mechanisms need to be in place to prevent a permanent rise in the incidence of poverty.

Kerala, like other jurisdictions, has found it difficult to implement poverty measures. Good governance is essential for poverty eradication. The high level of accountability associated with Kerala’s informed democratic process, where the government is regularly replaced, is not common in Southeast Asia. In 2024, corruption monitor Transparency International ranked ASEAN’s LDCs in the bottom third of countries. Improving governance and accountability are long-term challenges that require strengthening institutions or creating missing ones.

Initial conditions also matter. When it comes to education, health and consumption, Kerala has had a more equitable distribution than most ASEAN countries, but not by chance. Despite modest means, successive governments have prioritised human development and social investment. A relatively favourable distribution of social markers has helped in eliminating extreme poverty. Following the Covid-19 pandemic, various forms of inequality were exacerbated. This made poverty eradication more challenging in developing ASEAN countries. This needs to be addressed concurrently with policies that focus on poverty reduction.

Kerala’s experience demonstrates how in the face of competing demands and a tight budget, extreme deprivation can be tackled if prioritised through investments in health, education, and targeted social safety nets. But it must be paired with proactive identification and monitoring of the poorest households through data-driven targeting and community-led participation. It is difficult to reach the persistently and desperately poor, but Kerala has shown a way. 

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