Recalibrating the Narrative: Indian Inequality, Data Accuracy, and the World Bank’s Claims

✍️ By Suryavanshi IAS | GS Paper II & III | Essay Insights

🧭 Context

The World Bank’s India Poverty and Equity Brief (April 2025) has reignited the debate around inequality in India. It makes bold claims—almost complete eradication of extreme poverty and a substantial decline in consumption inequality between 2011–12 and 2022–23.

These findings have triggered mixed reactions in policy circles, academia, and the media. Critics cite data limitations, while others point to the visible rise in welfare, dietary improvement, and infrastructural indicators. The article by Prof. Ram Singh, an economist and policy advisor, offers a data-grounded and nuanced defence of the World Bank’s findings.

📊 What Did the World Bank Report Say?

Extreme poverty is nearly eradicated in India.
Consumption inequality, measured by the Gini coefficient, declined from 28.8 to 25.5 (2011–12 to 2022–23).
India is now among the least unequal countries globally, as per consumption patterns.
The report is based on HCES 2022–23, conducted using the Modified Mixed Reference Period (MMRP) methodology.

🧩 Decoding the Debate: Consumption vs Income Inequality

Type	What it Measures	Key Insight
Consumption Inequality	Distribution of household consumption	Shows betterment: healthier baskets, dietary diversity, access to goods
Income Inequality	Distribution of income earned across population	Still debated due to limited reliable data

🔍 Main Point:

The World Bank's report is based on consumption data, which has limitations in capturing elite consumption. However, India’s dietary and welfare improvements for the bottom 80–95% are real and measurable.

🧬 Key Indicators Supporting Decline in Consumption Inequality

Milk and egg availability ↑ by 45% and 63% respectively (2012–2023)
Fruits, vegetables, proteins—significant increase in availability
Calorie share of cereals ↓ while healthy food share ↑
Rural fruit consumption ↑ from 63.8% (2011–12) to 90% (2023)
Pucca homes & roads ↑ due to schemes like PMAY-G and PMGSY
Vehicle ownership among bottom 20% ↑ from 6% (2011) to 40% (2023)

🔍 Explaining the Apparent Paradox

Critics argue that elite consumption is not captured. But this limitation is universal. Even if we exclude the top 5%, the trend of reduced inequality holds true for the remaining 95%.

Further, income data from WIL (World Inequality Lab) assumes that 70–80% of Indians consume more than they earn—an unrealistic assumption leading to skewed conclusions.

📉 Has Income Inequality Increased?

🔹 WIL data (though contested) shows:

Bottom 50% income share ↑ from 13.9% to 15% (2017–22)
Top 10% income share ↓ from 58.8% to 57.7%

🔹 Top 1% income share ↑ by only 0.3 percentage points since 2017, possibly due to:

Improved tax compliance
Crackdown on evasion post-2016

🧮 Taxation Matters

Top 1% of all taxpayers pay 72.77% of all taxes
Welfare spending exceeds 8% of GDP
Hence, post-tax, post-transfer inequality is lower than what raw pre-tax income suggests

🧠 UPSC Relevance: Mains Linkages

🔸 GS Paper II – Governance

"Social justice and inclusive growth cannot be achieved without effective poverty alleviation and targeted welfare policies."
→ India’s welfare architecture (Ayushman Bharat, PMAY, PMGSY) has shifted the consumption base.

🔸 GS Paper III – Indian Economy

"Inequality, poverty, and human capital distribution are core to India’s economic stability."
→ Debates must consider data integrity, measurement tools, and actual lived experiences.

🔸 Essay Topics

“Poverty of Data vs Data on Poverty: A New Indian Reality”
“Is India still poor, or just poorly measured?”
“Development without Equity is Unstable, Equity without Development is Unsustainable”

📌 Key Takeaways for UPSC Aspirants

Insight	Implication
Consumption inequality has decreased	Boost in rural and poor consumption baskets shows real gains
Elite consumption underreported	Limits accuracy but doesn’t invalidate overall trends
Income data debatable	WIL’s estimates rely on unrealistic assumptions
Welfare state in action	Transfers, subsidies, infrastructure → visible gains for poor
Taxation critical to equity	High contribution of top 1% → reduces net income inequality
India’s story has changed	From poverty to aspirations, welfare, and upward mobility

🛤️ Way Forward

Conduct an official Income Survey for robust policy evaluation
Integrate tax, subsidy, and welfare data into inequality models
Avoid binary narratives: Neither deny inequality nor ignore success
Target education & healthcare equity to ensure long-term egalitarianism
Develop India-specific metrics of inclusive growth (beyond Gini)

🎯 Conclusion

“The story of India today is not merely about what is lacking, but what has transformed.”
As Prof. Ram Singh asserts, India's inequality narrative needs recalibration—moving away from selective outrage to holistic data-driven discourse. Recognizing gains does not mean denying gaps. It means measuring progress honestly and correcting policy course where necessary.

📝 By Suryavanshi IAS – For aspirants who seek truth beyond rhetoric and depth beyond headlines.
📚 Next in Series: “The Reality of India’s Welfare State: Data, Delivery & Disruption”

Suryavanshi IAS

Saturday, July 19, 2025