Inequality in India

Context:

A World Bank report (2025) claims that inequality in India has reduced, especially in terms of consumption inequality. It says India now has one of the lowest levels of inequality globally.

What does the World Bank Report say?

The report uses the Gini coefficient (a statistical measure of inequality ranging from 0 to 1):
- 0 = perfect equality
- 1 = perfect inequality
According to the report:
- India’s Gini coefficient fell from 0.288 (2011–12) to 0.255 (2022–23).
- This is based on consumption expenditure data (i.e., how much people spend on goods/services).
A falling Gini implies less inequality in consumption.

Global Comparison
Country	Gini Index
India	25.5
China	35.7
USA	41.8
Germany	31.9
France	32.7

India ranks 4th globally on the Gini Index of income equality (score: 5) – after Slovak Republic, Slovenia, and Belarus.
Poverty:The World Bank has also reported significant poverty reduction in India:
- Between 2011 and 2023, about 171 million people exited extreme poverty.
- In 2011, 16.2% of Indians lived on less than $2.15/day (global poverty line).
- By 2022–23, this dropped to just 2.3%.
- Under a revised poverty line of $3/day, poverty stands at 5.3%.

Why is the claim being questioned?

Many experts argue the World Bank data does not show the full picture, because:

Consumption ? Income or Wealth: Consumption inequality may appear low, but that doesn’t mean income and wealth are equally distributed.For example, subsidies, free ration schemes, and cash transfers can make consumption look equal even when income isn’t.
Income Inequality Remains Very High: Several studies (e.g., by Thomas Piketty, Lucas Chancel) show that:
- The top 1% in India earn 22% of the national income.
- In contrast, the bottom 50% earn only 13%.
- This has worsened since the 1990s post-liberalisation era.
Wealth is Highly Concentrated: The top 1% of Indians hold more than 40% of the total wealth.The bottom 50% own just around 3%.A 2024 Oxfam report confirmed these extreme disparities.

Targeted policy interventions

PM Jan DhanYojana: This has brought over 55 crore people into the formal banking system, improving access to financial services and enabling direct cash transfers.
Aadhaar and Direct Benefit Transfer (DBT):Aadhaar has provided a digital identity to nearly all residents. DBT has allowed the government to transfer subsidies and welfare benefits directly into beneficiary accounts, reducing leakages and corruption. As of 2023, total savings through DBT stood at over Rs3.48 lakh crore.
Ayushman Bharat: This health scheme provides insurance coverage of up to Rs5 lakh per family per year. It has issued more than 41 crore health cards, improving access to healthcare for the poor.
Stand-Up India: This scheme has provided collateral-free loans to SC/ST and women entrepreneurs, supporting over 2.75 lakh individuals by July 2025. It empowers marginalised groups to start their own enterprises.
PMGKAY (Pradhan MantriGaribKalyan Anna Yojana): This free food grain distribution scheme launched during the pandemic continued to benefit over 80 crore people, ensuring food security for the poorest.
PM VishwakarmaYojana: This supports traditional artisans and craftspeople through loans, toolkits, digital skilling, and marketing support. By mid-2025, nearly 30 lakh individuals had registered.

What is the Gini Index?

The Gini Index (or Gini Coefficient) measures how equally income or wealth is distributed among people in a country.
- A score of 0 means perfect equality (everyone earns the same).
- A score of 100 means perfect inequality (one person has all the income, the rest have none).
To visualise it, the Gini Index is based on the Lorenz Curve, which shows the gap between perfect equality and actual income distribution.