India Poverty and Equity Brief

Indian Inequality and the World Bank’s Claims 

1. Background and Context:

• The World Bank’s “India Poverty and Equity Brief – April 2025” claims that:

  • Extreme poverty in India has been nearly eradicated.

  • Consumption inequality has reduced significantly between 2011-12 and 2022-23, as shown by a drop in the Gini coefficient from 28.8 to 25.5.

  • India ranks among the least unequal countries in consumption terms.

2. Data Source and Methodology:

• Based on the Household Consumption Expenditure Survey (HCES) 2022–23 using the Modified Mixed Reference Period (MMRP).

• Adjustments made for some government-provided goods/services.

• The data reveals a healthier, more diversified consumption basket across all income groups.

3. Key Findings Supporting Reduced Inequality:

• Improved Diet Patterns (2012–2023):

  • Milk availability ↑ 45%, Eggs ↑ 63%.

  • Fresh fruit consumption among rural poor rose from 63.8% (2011-12) to 90% (2023).

  • Lower dependence on cereals; more protein and vegetable intake.

• Welfare Indicators:

  • Among poorest 20%, vehicle ownership rose from 6% to 40%.

  • Improved housing and road connectivity due to schemes like PMAY-G and PMGSY.

• Poverty Decline:

  • Estimated 27 crore people lifted out of extreme poverty (2011–2023) as per $3/day poverty line.

4. Debate on Income Inequality Estimates:

• Critics argue that HCES underrepresents elite consumption, but this limitation exists globally.

• The World Inequality Lab (WIL) uses income tax data and outdated consumption models, often:

  • Underestimating income for bottom 80%.

  • Overestimating share of top 1%, due to flawed assumptions (e.g., most families spend more than they earn).

5. Rebutting Popular Narratives:

• Even WIL’s own estimates show:

  • Bottom 50% share rose from 13.9% (2017) to 15% (2022).

  • Top 10% share fell from 58.8% to 57.7%.

• Top 1% income rose marginally (0.3%), largely due to better tax compliance, not actual inequality.

• Post-tax, post-subsidy incomes show lower inequality than pre-tax estimates:

  • Top 1% of taxpayers paid 42% of all individual tax.

  • Welfare transfers account for 8% of GDP, significantly boosting bottom-line incomes.

6. Structural Gaps and Remaining Challenges:

• Access to quality healthcare, education, and social mobility still shows inequality.

• India remains non-egalitarian in many respects, but the narrative must also include progress and aspirations.

India’s inequality discourse must move beyond selective, exaggerated narratives. While income disparities exist, the consumption data, poverty reduction, and welfare expansion show substantial progress. A balanced, data-driven understanding is essential for policy and public discourse.