World Bank claims significant reduction in India's consumption inequality, but income disparity remains a concern
A recent World Bank report, "India Poverty and Equity Brief: April 2025," asserts that India has almost eradicated extreme poverty and significantly reduced consumption inequality since 2011-12. Based on the Household Consumption Expenditure Survey (HCES) data for 2022-23, the consumption-based Gini coefficient reportedly dropped from 28.8 to 25.5. The report also highlights improvements in dietary intake for lower-income groups and welfare transfers. However, the author argues that while consumption inequality has decreased, income inequality remains a concern. Critiques are raised against income inequality estimates, particularly those from the World Inequality Lab (WIL), for using pre-tax income and making unrealistic assumptions about consumption exceeding income for many households, suggesting post-tax and post-subsidy analysis would show a decrease in income inequality.
Key Points
- The World Bank report claims India has significantly reduced consumption inequality and almost eradicated extreme poverty.
- The consumption-based Gini coefficient decreased from 28.8 to 25.5 between 2011-12 and 2022-23.
- Improvements in dietary intake and welfare transfers for the poor are noted in the report.
- The author critiques income inequality estimates, especially those from the World Inequality Lab, for using pre-tax income and unrealistic assumptions.
- A post-tax and post-subsidy income analysis would likely show a decrease in income inequality over the last decade.
Exam Facts
- World Bank report: "India Poverty and Equity Brief: April 2025".
- Consumption-based Gini coefficient dropped from 28.8 (2011-12) to 25.5 (2022-23).
- Data based on Household Consumption Expenditure Survey (HCES) for 2022-23.
- India pulled around 27 crore people out of extreme poverty between 2011 and 2023, based on the International Poverty Line of $3.
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