NEW DELHI: Between 2011 and 2023, according to the World Bank’s Spring 2025 Poverty and Equity Brief 171 million Indians escaped extreme poverty. The poverty rate fell from 16.2% to 2.3% under the international poverty line of $2.15 per day crossing the World Bank’s own benchmark of below 3% for near-elimination of extreme poverty at country level.
But poverty reduction and equality are two different things. And on equality, India’s numbers tell a more complicated story one that depends almost entirely on how you measure it.
What India’s Official Numbers Show
MoSPI’s Household Consumption Expenditure Survey for 2023-24 shows the Gini coefficient of consumption expenditure declining to 0.237 in rural areas and 0.284 in urban areas. These figures are down from approximately 0.28 rural and 0.36 urban in 2011-12. The World Bank using the same consumption data, assigns India a Gini score of 25.5 for 2022-23 placing it fourth most equal country globally, after the Slovak Republic, Slovenia and Belarus.
The urban-rural consumption gap has also narrowed. According to HCES 2023-24 the gap between urban and rural monthly per capita expenditure fell from 84% in 2011-12 to 70% in 2023-24. Urban households still spend significantly more than rural ones.
Government programmes receive substantial credit for these shifts. PM Jan Dhan Yojana has opened over 500 million bank accounts enabling direct benefit transfers, Ayushman Bharat provides health coverage to 500 million people PM Kisan transfers ₹6,000 annually to 110 million farmers. Aadhaar-linked Direct Benefit Transfers have channelled ₹34 lakh crore to beneficiaries while reducing leakages. NITI Aayog’s Multidimensional Poverty Index for 2023-24 reports that 25 crore people escaped multidimensional poverty over the past decade.
Why Another Number Tells a Different Story
The World Inequality Database arrives at a very different figure. According to WID data, India’s income-based Gini rose from approximately 52 in 2005 to 61 to 62 in 2023. The top 1% of Indians held 22.6% of total income in 2022-23. The top 10% held approximately 57%. Median earnings of the top 10% were 13 times higher than those of the bottom 10% in 2023-24.
These numbers sit alongside the official consumption Gini of 25.5. The gap between them is not a data error. It reflects a fundamental difference in what each measure captures.
Three Ways to Measure:Consumption, Income and Wealth
India measures its Gini coefficient on consumption expenditure. The official rationale per MoSPI is straightforward. People underreport income particularly in an economy where 80 to 90% of the workforce operates informally and only 7% of the population files income tax returns. Spending by contrast is more reliably revealed.
Consumption expenditure measures daily and regular spending while Income measures wages and profits and Wealth measures accumulated assets minus debts. Each produces a different picture of inequality.
A wealthy household and a middle-income household may spend similar amounts on daily goods while differing enormously in savings, investments and assets. Consumption data captures the former and misses the latter entirely.
The World Inequality Database uses tax returns, firm-level data and national accounts to estimate pre-tax national income. This method captures top-end concentration that consumption surveys structurally miss. As economist Jean Drèze of the Delhi School of Economics has argued, consumption Gini masks rising income disparities by ignoring wealth hoarding at the top.
Wealth data presents its own problems in India self-reported asset values are routinely underestimated. Intangible assets are excluded and no comprehensive national wealth survey has been conducted since 2019. This makes wealth-based Gini calculations unreliable in the Indian context which is precisely why MoSPI defaults to consumption.
The Tendulkar and Rangarajan Debate
India’s official poverty line traces back to the Tendulkar Committee of 2009, chaired by economist Suresh Tendulkar. The committee recommended a poverty line of ₹816 per person per month in rural areas and ₹1,000 in urban areas at 2011-12 prices. The methodology aligned the rural poverty basket with the urban mixed reference basket covering food and non-food expenditure.
Critics found this line too low, The Rangarajan Committee, constituted in 2012 under C. Rangarajan recommended significantly higher thresholds ₹972 per person per month in rural areas and ₹1,407 in urban areas at 2011-12 prices. The Rangarajan method incorporated calorie norms of 2,200 calories per day in rural areas and 2,400 in urban areas, separate rural and urban consumption baskets and additional norms for clothing, education and conveyance.
Under the Tendulkar method, India’s poverty rate in 2011-12 was 21.9%. Under Rangarajan, it was 32.6% nearly 11 percentage points higher. India continues to use the Tendulkar method as its official basis. The Rangarajan recommendations remain advisory and have not been formally adopted.
Bhalla and Bhasin proposed a relative poverty line in 2022 defined as 50% of median expenditure similar to European standards. Under this approach India’s poverty rate would stand at approximately 5 to 10%. Their argument is that absolute poverty lines become inadequate as average incomes rise and that poverty should be measured relative to prevailing living standards rather than fixed minimum thresholds.
The Survey Comparability Problem
A separate and significant concern surrounds the HCES 2022-23 data itself. The survey introduced three major methodological changes it expanded the item coverage from 347 to 405 items including digital services, shifted from a single visit to a three-visit protocol and adopted the Modified Mixed Recall Period combining 7-day, 30-day and 365-day recall windows depending on the item category.
Scholars including Santosh Mehrotra and Kumar at IHD, S. Subramanian, Himanshu et al. at JNU and several others have concluded that these changes make the 2022-23 data non-comparable with earlier NSS rounds. The World Bank itself acknowledges in its own methodological documentation that data limitations suggest consumption inequality may be underestimated.
The Survey to National Accounts ratio which compares survey-reported consumption with national accounts data fell from 52.4% in 2011-12 to 46.9% in 2022-23. This decline suggests growing underreporting in survey data relative to national accounts, raising questions about the reliability of poverty and inequality estimates derived from the new surveys.
The India Forum has specifically criticised the World Bank for proceeding with poverty estimates using data it acknowledges as non-comparable arguing this overstates India’s welfare gains.
What Poverty Reduction Has Not Resolved
India’s success in reducing extreme poverty is real and significant but poverty reduction and inequality reduction are not the same process. A country can lift its poorest citizens above a minimum threshold while simultaneously allowing the gap between the bottom and the top to widen. India appears to have done both simultaneously.
GDP grew above 7% annually through much of the past decade. According to WID data the top income shares surged during the same period. NITI Aayog’s Multidimensional Poverty Index for 2023-24 reports that 11.28% of Indians remain multidimensionally poor facing deprivation across health, education and living standards even if they are above the monetary poverty line.
Economists including Himanshu at JNU and S. Subramanian have written specifically on this gap the divergence between a falling poverty headcount and a worsening distribution of growth. Their argument is that welfare transfers lift people above minimum thresholds but do not address structural inequality in asset ownership, income generation and economic opportunity.
The Open Question
India’s official numbers tell a story of genuine progress and the World Bank confirms it. MoSPI’s surveys document it that the government’s welfare architecture has delivered measurable results at scale.
But the World Inequality Database’s income Gini of 61, the top 1%’s 22.6% income share, and the 13x earnings gap between the top and bottom decile tell a parallel story that consumption expenditure surveys are structurally designed not to capture.
Both use credible methodologies. They measure different things and that difference is precisely the debate India needs to have as it moves from eliminating extreme poverty to building a genuinely equitable economy.
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