Current affairs 19th July By Right IAS
Indian inequality and the World Bank’s claims
What the World Bank Report Says (April 2025): India has almost removed extreme poverty. Consumption inequality (difference in what people consume) has reduced since 2011-12. The Gini coefficient (a number that shows inequality) dropped from 28.8 to 25.5. India is now among the top 4 least unequal countries in terms of consumption. This surprised people because earlier reports showed very high inequality. Data Source Used: The report used data from the Household Consumption Expenditure Survey (HCES) 2022-23. This survey used a modern method called the Modified Mixed Reference Period (MMRP). The World Bank adjusted data to include some government free goods and services.
Criticism of the Report: Some experts say the data misses the spending of rich people, which may hide the true inequality. But this is a problem in all countries, not just India. Even if we ignore the top 5%, for the rest 95%, inequality has clearly reduced. Healthier Consumption Patterns: Indians are now eating healthier food than before. From 2012 to 2023: Milk availability increased by 45%. Egg availability increased by 63%. More fruits, vegetables, and protein-rich foods are consumed. Less dependence on cereals. Poorer households (bottom 20%) saw the biggest improvements in diet. Example: Fruit consumption in rural homes increased from 63.8% to 90%
Poverty Reduction: Whether we use the Tendulkar, Rangarajan, or NITI Aayog’s MPI methods, poverty has fallen. 27 crore people have come out of extreme poverty (based on $3/day international line). Rural development schemes like pucca houses and village roads have improved life in villages. Among the poorest 20%, vehicle ownership went from 6% in 2011 12 to 40% in 2023.
What About Income Inequality?
India has no official income survey, so people use other sources like World Inequality Lab (WIL) data. WIL uses: Income tax data to estimate income of the rich. Old consumption data to guess incomes of the poor and middle class. Their method wrongly assumes that 70%-80% of people spend more than they earn, which is not realistic. This leads to: Underestimation of poor people’s income. Overestimation of rich people’s income. What the WIL Data Shows (Even with Problems): Income share of the bottom 50% increased from 13.9% (2017) to 15% (2022). Income share of the top 10% decreased from 58.8% to 57.7%. Top 1% share rose only slightly (0.3%) — mostly due to better income reporting, not higher real income.
Pre-Tax vs Post-Tax Income: WIL reports show pre-tax income, but people live on post tax income (after taxes and subsidies). Top 1% pay: 42% of individual income tax. 72.77% of total tax revenue. So, their actual take-home income is much less than what WIL shows. Poorer people get many subsidies and welfare benefits, so their real income is higher than what is shown. Key Message: Yes, inequality and access to quality education and healthcare are still big issues. But India has also made huge progress in reducing poverty and improving living standards, especially for the bottom 50%. The national story is not just about problems, but also about hope, progress, and rising aspirations.
The Hindu
The Hindu
