The World Bank has positioned India as the fourth most equal country in the world.
A contradiction emerges from recent global assessments of India's economic landscape. The World Bank in its spring 2025 Poverty and Equity Brief ranks India as one of the most equal countries, placing it fourth globally. However, other international datasets highlight significant disparities, indicating persistence of inequality in India. These contradictions often stem from differences in methodology, indicators used, and the time frames considered in various studies. This paradox reveals the complex, multi-dimensional nature of equality in one of the world's most populous and diverse economies.
India's Remarkable Global Standing
The World Bank data reveals that India ranked fourth globally in terms of income equality, with a Gini Index score of 25.5 in 2022-23. This represents a significant improvement from the 28.8 score recorded in 2011-12, demonstrating a consistent downward trend in consumption-based inequality over the past decade.
To put this achievement in perspective, India's performance surpasses major global economies, including China (35.7), the United States (41.8), and all G7 and G20 nations. Only the Slovak Republic (24.1), Slovenia (24.3), and Belarus (24.4) achieved better scores, making India's position particularly noteworthy given its massive population and complex socio-economic landscape.
This performance places India in the "moderately low" inequality category, with Gini scores between 25 and 30, positioning it tantalizingly close to joining the exclusive "low inequality" group of nations with scores below 25.
Understanding the Methodology: Key to the Paradox
The dramatic difference between India's equality rankings across different databases stems from a crucial methodological distinction. The World Bank's assessment relies on consumption expenditure surveys rather than income data, which significantly influences the results and helps explain the apparent contradiction.
The Gini Index, developed by Italian statistician Corrado Gini in 1912, measures the extent to which income or consumption distribution deviates from perfect equality. A score of 0 represents perfect equality, while 100 indicates maximum inequality. Graphically Gini Index can be explained by the Lorenz curve. The World Bank methodology relies on consumption expenditure surveys rather than income data, which significantly influences the results.
Consumption-based measurements tend to show lower inequality because people maintain baseline consumption levels even during income fluctuations, often by drawing on savings or borrowing. This smoothing effect makes consumption inequality appear less severe than income inequality, which is why India's consumption-based Gini score differs dramatically from income-based measurements used by other international databases.
While this methodology provides valuable insights into living standards and basic needs fulfilment, it may not capture the full spectrum of economic inequality that characterises modern economies, particularly regarding wealth concentration and income distribution at the top.
Other Side: Income and Wealth Concentration
Alternative international databases convey a different story. The World Inequality Database indicates that India's income-based Gini coefficient is 61-62, ranking it among the most unequal countries globally. Research by economists, including Thomas Piketty, reveals that India's top 1% hold 22.6% of pre-tax income and 40.1% of total wealth (2022-23), among the highest concentrations globally.
Most striking is the finding that the wealthiest 0.001% (fewer than 10,000 people) control nearly three times the wealth of India's bottom half (around 460 million people). This concentration has led researchers to describe India's current economic structure as a "Billionaire Raj," where extreme wealth coexists with widespread poverty.
This wealth concentration suggests that while basic consumption needs are being addressed through government programs, the benefits of economic growth remain heavily skewed toward the top, creating a dual economy with vastly different realities for different segments of society.
Policy Interventions: Bridging the Equality Gap
India's progress in consumption equality reflects a comprehensive suite of government initiatives that have revolutionised welfare delivery and expanded access to essential services.
The digital infrastructure revolution, anchored by the trinity of Jan Dhan Yojana (over 55 crore bank accounts), Aadhaar (142 crore digital IDs), and Direct Benefit Transfer, has created an unprecedented welfare delivery system. This digital backbone has enabled direct cash transfers, eliminated intermediaries, and reduced leakages, with cumulative savings of ₹3.48 lakh crore by March 2023.
Healthcare transformation through Ayushman Bharat has provided coverage to over 41 crore families, while entrepreneurship support schemes like Stand-Up India have sanctioned over ₹62,807 crore to support marginalised communities. The Pradhan Mantri Garib Kalyan Anna Yojana continues to provide free food grains to over 80 crore beneficiaries, ensuring basic nutritional security.
These interventions have been remarkably effective in addressing consumption inequality and extreme poverty, demonstrating the power of targeted, technology-enabled welfare programs in ensuring basic needs are met across diverse populations.
Persistent Inequality Challenge
Despite consumption equality improvements, structural inequalities persist across multiple dimensions. The UNDP Human Development Report 2025 reveals that India loses 30.7% of its human development potential due to internal inequality, highlighting the gap between statistical progress and lived experiences.
Gender disparities remain particularly stark, with women earning 34% less than men for similar work according to the International Labor Organisation (ILO). Furthermore, female labour force participation at just 41.7% compared to 78.8% for men. Caste-based discrimination continues to influence economic opportunities, with SC, ST, and OBC individuals earning substantially less than upper-caste individuals. Approximately 90% of India's workforce remains in informal employment, lacking job security and comprehensive benefits.
These social dimensions of inequality suggest that while government programs have successfully addressed basic consumption needs, deeper structural inequalities require sustained attention and comprehensive policy interventions beyond welfare transfers.
Reconciling the Paradox: A Nuanced Understanding
The apparent contradiction between India's equality rankings reflects the multi-dimensional nature of economic inequality in complex societies. The World Bank's consumption-based assessment captures the remarkable success of welfare programs in ensuring basic needs are met and extreme poverty is eliminated. This represents genuine progress in human development and social justice.
However, income and wealth inequality measurements reveal persistent challenges in creating inclusive growth that benefits all segments of society proportionally. While the floor of economic well-being has risen significantly, lifting many out of poverty, the benefits have not been evenly shared. The concentration of wealth at the top, coupled with persistent social inequalities, means that the economic ceiling remains out of reach for a large segment of the population.
This dual reality requires nuanced policy responses that build on welfare program successes while addressing structural inequalities through progressive taxation, wealth redistribution mechanisms, formal employment creation, and social reform initiatives.
Conclusion: Beyond Single Metrics
India's ranking as the fourth most equal country globally in consumption terms represents a significant achievement that should be celebrated while acknowledging its limitations. This progress reflects the success of comprehensive welfare programs and digital infrastructure in ensuring basic needs are met for the vast majority of Indians.
However, a complete understanding of India's equality landscape requires looking beyond single metrics to acknowledge the persistence of income and wealth inequality at the top, along with deep-seated social disparities. India's equality journey is not a simple success story but a complex transformation with multiple dimensions that require continued policy attention and social reform.
The findings underscore the importance of nuanced analysis in understanding development patterns and policy effectiveness in one of the world's most dynamic economies. As India continues its development journey, balancing consumption equality achievements with addressing structural inequalities will be crucial for sustainable and inclusive growth that benefits all segments of society.
The World Bank's 2025 assessment of India's equality status represents just one aspect of the evolving global economic landscape that shapes modern governance and international relations.
Master Economic Development & Policy Analysis with VisionIAS Comprehensive Current Affairs →