A recent study by the People Research on India’s Consumer Economy (PRICE) has highlighted a troubling trend in India’s economic landscape—income inequality remains a significant issue, surpassing levels recorded in the 1950s. The working paper, released on 5 January, underscores the critical need for precise measurement of income distribution to formulate effective policies aimed at inclusive growth and socio-economic equity.
Drawing from comprehensive household income surveys by the National Council of Applied Economic Research and PRICE, the study reveals a stark increase in the Gini coefficient, a key statistical measure of income inequality. In 1953-55, the Gini coefficient stood at 0.371, but by 2022-23, it had risen to 0.410. This escalation underscores a widening gap between the wealthiest segments and the rural and marginalized populations, who continue to face restricted access to essential services such as education, healthcare, and economic opportunities.
The report elaborates that a Gini index of zero represents perfect equality, and a higher coefficient indicates greater income disparity. According to Rajesh Shukla, CEO of PRICE and the paper’s author, income inequality in India has exhibited a “see-saw” pattern, with periods of both improvement and deterioration. “The Gini index improved from 0.463 post-independence to 0.367 in 2015-16 but worsened to 0.506 by 2021 due to disruptions such as the COVID-19 pandemic,” Shukla noted. The data shows a particularly sharp increase from 2015-16 to 2020-21, when the index jumped from 0.395 to 0.528.
The post-pandemic recovery, however, offers a glimmer of hope. “The recovery suggests that targeted policy interventions can effectively address income disparities,” the paper observed.
On the issue of wealth concentration, the paper compares data from the World Inequality Database (WID) and Indian household surveys, emphasizing that the latter provides a more realistic picture. According to WID, the top 1% of the population controlled 22.6% of the national income in 2023. In contrast, Indian surveys report that this segment held only 7.3% of the national income. For the middle 40% of the population, household surveys indicate a stable income share, ranging from 43.9% to 46.6%, suggesting economic stability for this group. Meanwhile, WID estimates reflect a significant decline in the middle population’s share, from 41.5% in 1953-55 to just 27.3% in 2022-23.
The bottom 50% of the population, according to household surveys, shows a fluctuating income share, peaking at 25.5% in 1961-65 and dropping to 15.8% in 2020-21, before recovering to 22.8% post-pandemic. Despite the disparities between Indian and global estimates, the consensus is clear: wealth remains heavily concentrated among the top earners, while the bottom segments continue to struggle.
The paper concludes with a call for sustained and inclusive economic strategies to address these entrenched inequalities. As Shukla highlighted, “There is an entrenched concentration of wealth among the top income earners, coupled with the persistent struggles of the bottom 10%.” This signals an urgent need for policy interventions to promote equitable economic growth.
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