India is a witness of regional disparities in many sphere of socio- economic development. On one side, world’s majority of new billionaires are in India and on the another side, India has majority of poor people. Like that, in development, the States like Kerala, Tamil Nadu, Punjab, and Gujrat are in the forefront and BIMURAO (Bihar, Madhya Pradesh, Uttar Pradesh, Rajasthan and Orissa) States are far behind in many aspects. The main objective of the Eleventh Plan was faster and inclusive growth and it is going to emphasis in the forthcoming Twelfth Plan also. As the approach paper of the Twelfth Plan said that expanding educational facilities and improving quality of education are key instruments and reducing poverty is a key element for achieving faster and inclusive growth. Various studies proved that there is a strong correlation between poverty and education and many more international studies revealed that improvement in education reducing poverty resulted in regional balanced development. This paper aims to analyze the regional disparities in reducing poverty and increase in literacy (education) in India with the emphasis on State wise analysis. The elasticity concept has used to study the relationship between poverty reduction and educational advancement in the name of “education elasticity of poverty”. Education elasticity of poverty is the change in poverty due to the change in education.