Income Inequality in India - 2023
In 2023, India's income inequality remains higher than in the 1950s, despite some post-pandemic improvements, as indicated by a working paper from the People Research on India’s Consumer Economy (PRICE).
Key Findings
- The Gini coefficient for India in 2023 is 0.410, an increase from 0.371 in 1955. In 2021, it had peaked at 0.528 due to the pandemic.
- The Gini coefficient measures income distribution inequality; 0 indicates perfect equality, 1 indicates perfect inequality.
- Rural Gini coefficient rose to 0.405 in 2023 from 0.341 in 1955, while urban areas saw a slight decline from 0.392 to 0.382.
- The bottom 10 per cent households saw their income share decrease from 3% in 1955 to 2.38% in 2023.
- The bottom 50 per cent households saw a slight increase in income share, from 22% to 22.82% in the same time frame.
Recommendations
- Investment in education, healthcare, and infrastructure, especially in rural areas, is crucial.
- Implementing social safety nets and progressive taxation is necessary for equitable growth distribution.
Social Welfare Impact
- Programs like the Mahatma Gandhi National Rural Employment Guarantee Act and direct benefit transfers have improved the income share of the bottom 50 per cent.
Challenges and Observations
- Despite improvements, a "seesaw" pattern of inequality persists, influenced by external disruptions and policy shortcomings.
- Adaptive policymaking is essential for sustained progress post-pandemic.
- Model-based synthetic estimates, such as those by the World Inequality Database, often overstate inequality by over-relying on top income earners’ data.
- According to WID, the top 1 per cent controlled 22.6% of national income, while surveys indicate they controlled only 7.3%.
