Inequality: India’s Low Gini Rank Tells Only Half the Story
FM Nirmala Sitharaman & PM Narendra Modi Image credit X.com
While World Bank data shows equitable consumption growth, deeper structural inequalities—of wealth, caste, gender, and region—remain obscured behind the numbers
By P SESH KUMAR
NEW DELHI, July 7, 2025— A government media statement cited the latest World Bank data, asserting that India ranks fourth globally on the Gini coefficient at 25.5—a remarkably low figure for a nation of its size. This places it behind only Slovakia, Slovenia, and Belarus, and ahead of heavyweights like China (35.7) and the United States (41.8). The core conclusion is that India’s economic growth has been shared equitably, lifted 171 million people out of extreme poverty from 2011 to 2023, and that targeted policies—Jan Dhan, Aadhaar, Ayushman Bharat—have driven this outcome.
At face value, this narrative is compelling: a rising star achieving not only rapid GDP growth, but growth that lifts real value for the poorest. But unpacking the analysis would likely reveal layers that may complicate the headline.
First, the Gini index used here is the coefficient of consumption, not income. The two often tell distinct stories. Consumption inequality tends to understate disparities versus income or wealth inequality.
As we are aware, the Gini coefficient is a number between 0 and 1 that measures how evenly income or wealth is distributed in a society. A Gini of 0 means perfect equality—everyone has the same income—while a Gini of 1 means perfect inequality—one person has everything, and everyone else has nothing. The lower the Gini, the more equal the society is; the higher it is, the more unequal remain significantly skewed in India.
For instance, studies such as Thomas Piketty’s “Billionaire Raj” documented that the top 1 % controls over 22 % of income and over 40 % of wealth. Focusing only on consumption Gini could mask that deep wealth concentration.
Second, national averages—like a low Gini—can obscure vast regional differentials. Northern and eastern states lag seriously behind southern and western ones in per‑capita income, access to education, sanitation, and healthcare.
Even within prosperous states, caste, gender, and rural/urban divides could reveal stark inequality. For example, women’s workforce participation, though rising, remains under 25 %, and they earn far less for comparable work. Caste-based digital divides further limit upward mobility.
Third, while poverty reduction of 171 million people is laudable, we should not forget that it is measured against a relatively low extreme poverty line (often $2.15/day). Other metrics—national poverty lines, multidimensional poverty, or living standards at $3.65/day PPP—suggest far more remain in persistent poverty. The Guardian noted that under a $3.65/day threshold, India’s poverty rate approached 47 %.
Fourth, one could concede that policy interventions like direct benefit transfers and financial inclusion have indeed helped reduce bottom‑end deprivation. But they don’t necessarily address structural inequality: landholding concentration, lack of progressive taxation, corporate dominance, gender and caste discrimination. These issues persist in ways that statistics like the Gini coefficient may not immediately capture. As one Reddit user in r/Economics argued, India “is not your inequality story”—implying that the headline may be more narrative‑driven than representative of deep structural realities.
India’s Gini‑based ranking is factually correct, but the narrative accompanying it risks oversimplifying. Emphasizing equitable consumption patterns and credit inclusion is valid. Yet proclaiming a broad, deep, and enduring egalitarian transformation is premature. The low Gini excludes many structural dimensions—income, wealth, gender, caste, and regional inequities. It also relies heavily on a poverty reduction framework that hinges on low threshold measures.
In essence, India’s performance is praiseworthy poverty may have fallen, consumption inequality may be moderate, and many have gained access to banking and some degree of healthcare. But concentration of wealth, low labour force participation of women, caste‑based exclusion, and regional disparities suggest deeper inequality remains entrenched. Policy narrative should acknowledge these layers rather than celebrating a Gini rank as a definitive indicator of an equal society.
Hence, while the World Bank data and government analysis are technically accurate, they would reflect a narrow slice of the inequality spectrum. For a more complete picture, one must complement it with measures of wealth inequality, income disparity, gender and caste-based analysis, and state-level differentials. Celebrating progress without a realistic awareness of the persistent, layered challenges risks fostering complacency rather than building momentum toward genuinely equitable and inclusive development.
It would be interesting to know CAG’s take on this—assuming it has the time, inclination and intention to weigh in on this matter of significance to national development through comprehensive and holistic assessment.’
(This is an opinion piece, and views expressed are those of the author only)
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