by Introduction: A Surprising Picture
The World Bank’s recent data has triggered debate by ranking India as the “fourth most equal” country globally — based on a Gini coefficient of just 0.255 in 2022–23. The Bank also claimed extreme poverty in India had dropped from 16.2% in 2011 to just 2.3% today, with 171 million people lifted out of poverty. Government officials quickly embraced these figures as proof of inclusive growth. But scratch the surface, and a far more complex — and troubling — picture emerges.
The Data Disconnect: Consumption vs. Income
The headline Gini number is based on consumption, not income — a critical distinction. India does not have reliable income data, so the World Bank relies on household consumption surveys. But economists agree that consumption inequality appears far lower than income inequality because wealthier individuals save more of their income, muting disparities in spending patterns.
In fact, India’s consumption Gini has remained around 0.25 for decades. Meanwhile, independent studies like the World Inequality Database show that India’s income Gini has sharply risen — from about 0.52 in 2004 to approximately 0.62 in 2023. The top 1% now earn more than the entire bottom 50%. In short, while consumption appears equal, actual income and wealth are becoming increasingly concentrated.
Rising Wealth at the Top
Recent research by Bharti, Chancel, Piketty, and Somanchi reveals India’s top 1% now hold 22.6% of national income and over 40% of private wealth — both historic highs. The top 0.001% (just a few thousand individuals) own more wealth than the bottom 50% combined. Meanwhile, millions still struggle with basic healthcare, nutrition, and housing. Inequality at the top has intensified, even as national averages suggest moderation.
What Gini Hides: Caste, Gender, Region
One national Gini figure cannot reflect the deep fractures in Indian society — caste, gender, and geography being the most prominent. For instance, five states (Uttar Pradesh, Bihar, Maharashtra, West Bengal, and Madhya Pradesh) account for over half of India’s remaining extreme poor. Access to piped water, quality healthcare, and education is heavily skewed in favor of wealthier or southern states. Gender disparity remains stark: female workforce participation remains below 32%, and caste-based exclusion persists, especially among Dalits and Adivasis.
Thus, while consumption inequality may seem modest on paper, everyday lived inequality across social groups remains severe.
Methodological Blind Spots
India’s inequality statistics are handicapped by poor-quality data. Surveys typically underrepresent the richest households, and many of the wealthiest Indians avoid participating altogether. As a result, both income and consumption surveys routinely miss the top percentile, leading to artificially low inequality readings.
Moreover, Gini coefficients are less sensitive to the extremes — they compress sharp inequalities between the top 0.1% and the bottom 50%. Better measures like the Palma Ratio, top 1% income shares, and access-based indexes offer a more accurate assessment of disparities.
The Way Forward: Honesty, Data, and Policy
To truly understand inequality in India, policymakers must rely on a broader dashboard of indicators — combining household surveys with tax data, using wealth and income shares, and disaggregating data by caste, gender, and state. India also needs to improve its economic data systems, including publishing regular, high-quality household income surveys and more transparent tax statistics.
On the policy front, India must strengthen redistributive tools: from progressive taxation and wealth taxes to larger investments in public education, healthcare, and welfare for its most vulnerable. Without addressing inequality head-on, social cohesion, economic growth, and democratic legitimacy all face long-term threats.
Conclusion: A Dangerous Misreading
The World Bank’s report may offer a feel-good narrative, but it risks encouraging complacency at the highest levels. Policymakers celebrating India’s supposed “equality” may ignore urgent reforms needed to address entrenched inequalities. India’s economic rise will only be meaningful when it uplifts all citizens — not just the top tier. Accurate data and honest analysis must replace simplistic, feel-good headlines.
