India fourth in global equality, but it’s not a lived reality

AS per the World Bank’s 2025 Poverty and Equity Brief, India is now ranked as the fourth ‘most equal’ country in the world. Based on the Gini coefficient, the score indicates a fairly equitable distribution of income across the population. When many industrialised economies are experiencing increasing inequality, India’s score is being lauded as a triumph. But what does “equality" mean? Is India on the verge of an inclusive economic miracle or is the reality more complicated?

A Gini value of 0 indicates full equality, whereas a Gini score of 1 represents entire disparity. India’s consumption-based Gini index fell from 28.8 in 2011-12 to 25.5 in 2022-23, putting it only behind the Slovak Republic, Slovenia and Belarus. This score is lower than that of the US (41.8), China (35.7) and the UK (32.4). It is also more equitable than G7 and G20 countries.

The World Bank study also points out extreme poverty, defined as living on less than $2.15 per day, decreased from 16.2 per cent in 2011-12 to 2.3 per cent in 2022-23 in India, resulting in 171 million people rising above this threshold.

Its causes have not been investigated by the World Bank. However, certain inferences can be made from official records. For example, the Pradhan Mantri Garib Kalyan Anna Yojana, PM-KISAN, Ujjwala and Jan Dhan; MGNREGA, PMAY, Saubhagya, Swachh Bharat and Jal Jeevan Mission have reduced multidimensional poverty, ensuring that poor have equal access to basic living standards as others. While these may not directly impact income measures, they increase effective equality, which improves the total distribution, as assessed by Gini coefficient.

Ironically, one of the structural elements leading to India’s high equality rating is the prevalence of informal economy, which has very little income disparities. With 90 per cent of the workers in informal jobs, wages tend to be poor. While this achieves statistical equality, it also indicates widespread underemployment and low productivity.

Moreover, as a measure of inequality, consumption inequality is generally lower than income inequality for each country. It’s because rich people save a lot of their money, making spending look more equal than income even though it’s not. Therefore, it’s not fair to compare India’s spending Gini of 25.5 to the income Ginis of other countries.

Thus, India’s equality is as much about narrowing income disparities between the poor and lower middle classes as it is about wealth redistribution.

While the World Bank’s ranking focusses on outcome-based equality, Oxfam’s Commitment to Reducing Inequality (CRI) Index takes a policy-based approach. In the 2024 edition, India ranks 127th out of 164 countries, indicating mediocre performance. The CRI Index evaluates economic performance and policy commitment in three critical areas: progressivity of government social sector expenditures, progressivity of taxation and progressivity of labour legislation.

Despite improved Gini numbers, India confronts systemic issues that threaten long-term equality. The elimination of the wealth tax and underutilisation of direct taxes have resulted in a system in which the poor pay more (relatively) than the wealthy. The tax system must be changed to ensure that wealthy individuals and corporations contribute proportionally to national growth.

Second, India spends less than 2.5 per cent of GDP on healthcare and 3.1 per cent on education. These figures must improve if long-term equality is to be realised. Third, as the gig economy grows and informal labour dominates, minimum wages, social security and union rights must feature in the development discourse. Without formalisation and legal safeguards, disparities in job quality and security will continue. Finally, gender wage disparities and caste-based exclusion continue to afflict labour market and society.

We are only halfway there. If India wants to go from equal poverty to equitable prosperity, it must prioritise redistributive policies, invest in human capital and enact inclusive labour laws. Equality must be more than just a metric; it must become a living reality.

Madhur M Mahajan is Assistant Professor, GGDSD College, Chandigarh.

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