India's Progress in Reducing Inequality
A recent World Bank report, "India Poverty and Equity Brief: April 2025", highlights significant progress, claiming near eradication of extreme poverty and a notable reduction in consumption inequality since 2011-12. This report has stirred debate, challenging the conventional narrative of high inequality in India.
Key Findings of the World Bank Report
- The report utilises data from the Household Consumption Expenditure Survey (HCES) for the period 2022-2023, employing the modified mixed reference period (MMRP) method—an internationally recognised statistical technique.
- According to the Gini coefficient, India is among the top four least unequal countries, with a drop in consumption-based Gini from 28.8 to 25.5 between 2011-12 and 2022-23.
Poverty Reduction and Economic Growth
- India has lifted around 27 crore people out of extreme poverty since 2011, based on the International Poverty Line.
- Significant improvements in rural infrastructure, including pucca homes and roads, were observed, driven by programs such as the Pradhan Mantri Gramin Awas Yojana and the Pradhan Mantri Gram Sadak Yojana.
- Vehicle ownership among the poorest 20% of households increased from 6% in 2011-12 to over 40% today.
Income Inequality Analysis
- There is a lack of official data on income distribution; estimates by the World Inequality Lab (WIL) are based on tax data, which may not accurately reflect the income levels of low- and middle-income households.
- The share of national income for the bottom 50% increased from 13.9% in 2017 to 15% in 2022, while the top 10% decreased slightly from 58.8% to 57.7%.
- Post-tax and post-subsidy analysis shows that income inequality has likely decreased due to tax contributions and high welfare transfers.
Conclusion
While India still faces challenges in equality, especially in health and education access, the narrative is shifting from poverty alone to include progress and aspirations. The journey towards an egalitarian society continues, but the country's successes deserve recognition alongside the challenges.
