India has emerged as a leader in income equality, securing the 4th position globally, according to recent data from the World Bank. This is a significant achievement, especially considering India's size and diversity. According to the latest World Bank data, India's Gini Index stands at 25.5. This places India among the most equal countries in the world in relative terms.
Gini Index Explained
The Gini Index is a crucial measure of income distribution, with 0 representing perfect equality and 100 representing maximum inequality. India's Gini Index of 25.5 is better than many major economies, including China (35.7) and the United States (41.8). India's score is also more equal than every G7 and G20 country. The countries with better income equality scores than India are the Slovak Republic, Slovenia, and Belarus.
A government note indicated that India falls into the "moderately low" inequality category, which includes Gini scores between 25 and 30. India is only a fraction away from joining the “low inequality” group, which includes countries like the Slovak Republic (24.1), Slovenia (24.3), and Belarus (24.4). Apart from these three, India has a better score than all of the other 167 countries for which the World Bank has released data.
Progress in Income Equality
India's Gini Index has improved from 28.8 in 2011 to 25.5 in 2022. This steady improvement reflects the country's progress in combining economic growth with social equity. The Ministry of Social Welfare stated that this reflects how India's economic progress is being shared more fairly among its people and that the government has focused on reducing poverty, increasing financial access, and giving welfare help directly to those who need it.
Poverty Reduction
A key factor behind India's improved income equality is its success in reducing poverty. The World Bank's Spring 2025 Poverty and Equity Brief noted that approximately 171 million Indians were lifted out of extreme poverty between 2011 and 2023. During the same period, India's poverty rate dropped sharply from 16.2% to just 2.3%, based on the global poverty line of $2.15 per day.
Government Initiatives
Several government initiatives have played a crucial role in driving this transformation. These include:
Other Factors
The Economic Survey 2024-25 highlights that the Gini coefficient, as a measure of inequality in consumption expenditure, is declining. For rural areas, it declined to 0.237 in 2023-24 from 0.266 in 2022-23, and for urban areas, it fell to 0.284 in 2023-24 from 0.314 in 2022-23. Various fiscal policies of the government are aiding in reshaping income distribution. Furthermore, government health expenditure has increased from 29.0% to 48.0%, while the share of out-of-pocket expenditure in total health expenditure has declined from 62.6% to 39.4%, reducing financial hardship for households.
