India is now the fourth most equal country globally, according to a new report by the World Bank. The report highlights a major drop in income inequality and extreme poverty between 2011 and 2023, placing India just behind Slovak Republic, Slovenia, and Belarus in equality rankings. It is ranked far ahead of countries like the United States, United Kingdom, and China.
The Gini Index, which measures income distribution, now stands at 25.5 for India, down from 28.8 in 2011. A score of 0 represents perfect equality while 100 means maximum inequality. India’s score puts it in the moderately low inequality category, alongside several European countries. For comparison, China has a score of 35.7 and the United States 41.8.
A major factor behind this progress is the sharp decline in extreme poverty, defined as living on less than $2.15 a day. The report states that extreme poverty in India fell from 16.2 percent in 2011 to 2.3 percent in 2023, lifting 171 million people out of poverty. Rural poverty dropped from 18.4 percent to 2.8 percent, while urban poverty decreased from 10.7 percent to 1.1 percent, reducing the rural-urban gap from 7.7 to 1.7 percentage points.
Five key states—Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh—accounted for 65 percent of the poor in 2011 but now make up two-thirds of the overall poverty reduction, though they still host 54 percent of the remaining extremely poor population.
Multidimensional poverty, which includes access to healthcare, education, and living standards, has also seen a major drop. The MPI fell from 53.8 percent in 2005-06 to 15.5 percent in 2022-23. Government schemes like PM Jan Dhan Yojana, Direct Benefit Transfer and Stand-Up India have played a key role.
However, challenges remain. Only 23 percent of non-farm jobs are formal, and most farm jobs are still informal. Female employment is just 31 percent, with 234 million more men in paid work. Youth unemployment is 13.3 percent overall and 29 percent among those with higher education.
India has also transitioned into a lower-middle-income economy, with poverty under the $3.65-a-day line dropping from 61.8 percent to 28.1 percent in the last decade.
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