Introduction

India was recently claimed to be the 4th most equal country in the world, a bold assertion based on a selective interpretation of a World Bank report. This claim relies solely on a decline in consumption-based Gini coefficient, while ignoring deeper income and wealth inequalities that remain embedded in the socio-economic fabric of the country.

Understanding the Gini Coefficient

The Gini coefficient is a widely used measure of inequality in distribution:

• Scale: Ranges from 0 (perfect equality) to 100 (perfect inequality)
• Types:
• Income-based Gini
• Consumption-based Gini
• Wealth-based Gini

Why the Type of Gini Matters:

• India’s consumption-based Gini may be low, but income and wealth-based Gini scores tell a drastically different story.
• The type of metric used can mask the true depth of inequality.

The Government’s Claim vs the World Bank’s Caution

• The government claimed India’s equality based on falling consumption inequality, with Gini dropping from 28.8 (2011–12) to 25.5 (2022–23).
• However, the World Bank cautioned:
• The decline may stem from methodological issues.
• Surveys often underreport the consumption of the rich, leading to artificially low inequality estimates.
• Income and wage inequality remains very high.

Why Consumption Data Masks True Inequality

• Consumption equality ≠ income or wealth equality:
• Wealthy individuals consume less proportionally and invest more, which is underreported.
• The poor spend most of their earnings, making consumption more visible.
• Luxury consumption, black money, and asset accumulation are excluded from most surveys.

Income Inequality: A Steep Rise

• According to World Bank:
• Income-based Gini rose from 52 (2004) to 62 (2023).
• India ranks 176th out of 216 in income equality.
• In 2023–24, the top 10% earned 13 times more than the bottom 10%.

Implication:

• India’s economic growth has benefited a small elite, leaving most behind.

Wealth Inequality: Even More Alarming

• India’s wealth Gini index is ~75, showing extreme concentration of assets.
• As per World Inequality Lab & Oxfam:
• Top 1% own 40.1% of total wealth.
• Top 1% earn 22.6% of total income.
• Bottom 50% own only 6.4% of wealth and earn just 15% of income.

Impact:

• Wealth concentration reinforces educational gaps, unequal opportunity, and intergenerational poverty.

Nutrition and Calorie Inequality

• India ranks 102/185 in per capita calorie intake (UN FAO).
• Indicates hidden hunger and chronic food insecurity.
• Nutrition inequality remains stark, especially among rural and low-income communities.

Labour Market and Wage Disparities

• Significant wage gaps persist across gender, caste, and geography.
• Casual and informal workers earn the least.
• Gender wage gap remains around 19–25%.
• SCs/STs and Muslims are underrepresented in high-paying, formal jobs.
• The gig economy lacks job security, social protection, and fair wages.

Rural–Urban and Regional Inequality

• Urban India commands most of the income and infrastructure.
• Rural consumption growth lags, worsening overall inequality.
• Southern and western states outperform central and eastern regions in health, education, and income.

Structural Drivers of Inequality

• Education gaps and high dropout rates among marginalized groups.
• Healthcare disparities and high out-of-pocket costs.
• Digital divide limits access to information and opportunities.
• Asset concentration in land, real estate, and finance.
• Jobless growth means economic expansion is not translating into jobs.

Global Comparison: Where India Stands

India is closer to South Africa than to advanced democracies, belying any claim of global equality leadership.

Narrative vs Reality: Government Blind Spots

• The government has selectively cited favourable consumption metrics while ignoring income and wealth inequality.
• Growing mistrust in official statistics and data opacity undermines informed policymaking.
• Honest recognition is key to designing effective reforms.

Way Forward: A Multi-Dimensional Strategy

1.     Strengthen Statistical Infrastructure: Reform NSSO and PLFS to better reflect informal and high-income data.

2.     Taxation Reform: Consider progressive taxation, wealth/inheritance taxes. Reduce regressive indirect taxes on the poor.

3.     Redistributive Welfare: Expand and deepen:

a.      Direct Benefit Transfers

b.     Employment guarantees

c.      Food and health subsidies

d.    Labour Protections

4.     Formalise informal work with:

a.      Social security

b.     Minimum wage standards

5.     Targeted Inclusion: Prioritise education, healthcare, and entrepreneurship for:

a.      SCs/STs

b.     Minorities

c.      Women

Conclusion

The claim that India is one of the world’s most equal countries is based on a narrow, misleading interpretation of consumption data. In contrast, income and wealth inequality have worsened sharply in recent years.

India’s deep inequality is structural, not circumstantial. Addressing it requires transparent data, political resolve, and inclusive policies that go beyond rhetoric.

To unlock its true potential, India must include the millions it has left behind. Equality is not just a statistic—it’s a societal foundation