EDITORIAL 1: Two unequal
Context
The facts are clear and unambiguous — consumption inequality in India, as measured by the Gini index, was the lowest (most equal) in the world in 2022-23.
Not an idle armchair criticism
- However, the debate on this is messy and bordering on sordid. This is not idle armchair criticism.
- World Bank stated that India is not merely the world’s fourth-largest economy; it is also the world’s fourth most equal society.
- Unfortunately, this is false on both counts. India will not be the fourth-largest economy at least until March 2027; and India today is the most equal society — not fourth most equal — but only in terms of consumption.
- Its rank in terms of an income Gini is not known since India, to date, has not conducted an official income distribution survey.
The equality status
- The government shared a report claiming that India is one of the most equal societies in the world. This was based on a study that looked at consumption inequality — how equally people spend money — and found India to be the most equal in that category.
- However, this led to confusion. Critics pointed out that the report mixed up different types of data: consumption inequality and income inequality.
- These are two very different ways to measure inequality, and comparing them directly is like comparing apples and oranges.
- Some critics made this point well, stating that a fair comparison should involve comparing India’s consumption inequality with other countries' consumption inequality — or comparing income inequality with income inequality.
- But then, they also made a mistake by using a third kind of data — synthetic estimates from a private database. These estimates aren't based on actual surveys, but on models and assumptions.
- Many researchers have raised doubts about how accurate these synthetic numbers are, especially for countries like the U.S.
The World Bank’s role and Poverty Inequality Platform (PIP)
- The World Bank has laboured to construct the popular and respected Poverty Inequality Platform (PIP), which provides data for all the official consumption and income surveys in the world.
- PIP reports data on 167 countries, 2,258 distributions for years 1963 to 2024. These data are the only “official” source of comparable income and consumption distributions.
- The PIP data does not contain any information on income distribution for India or South Africa — for good reason, because no official income survey exists for either of these countries.
- According to PIP, the most unequal (consumption) country in the world, at least for the last 25 years, is South Africa with a Gini of 63.0. The most equal is India with a Gini of 25.5 in 2022.
- Despite having no official income data, the World Bank's April 2025 Poverty and Equity Brief for India noted that the consumption-based Gini index improved from 28.8 in 2011–12 to 25.5 in 2022–23, but added that inequality may be underestimated due to data limitations.
- In contrast, the World Inequality Database shows income inequality rising from a Gini of 52 in 2004 to 62 in 2023.
- The briefs report summary data for 130 developing countries, but only for India does the World Bank quote WID synthetic results on income distribution.
- To add insult to statistical injury, the World Bank believes that official surveys have data limitations but WID synthetic distributions have no data limitations.
- The World Bank has been a pioneer in the collection and verification of consumption and income distribution data since its creation.
- The PIP database is testimony to its intellectual honesty and expertise. However, the World Bank states that India has the lowest consumption inequality in the world; in the same breath it states that India has the highest income inequality.
- Such a paradoxical result has heretofore not been documented by any organisation in the world, let alone by a well-known and internationally renowned NGO. One of these estimates is clearly in huge error.
Conclusion
The whole world is watching, and awaiting, a meaningful response from sister organisations on this important credibility question.