INDIA RANKED WORLD’S 4TH MOST EQUAL SOCIETY BY WORLD BANK
Context:
- A recent World Bank report, released on July 5, 2025, highlights India's significant achievement in income equality, positioning it as the fourth most equal society globally.
- This milestone is particularly notable for a country of India's size and complexity, demonstrating that robust economic growth can be combined with inclusive development.
INDIA’S ACHIEVEMENT IN INCOME EQUALITY
- Global Ranking: India ranks as the 4th most equal country globally in terms of income distribution, according to the World Bank.
- Gini Index: India's Gini Index stands at 25.5 (as of 2022 data, reported in Spring 2025).
- The Gini Index measures income distribution from 0 (perfect equality) to 100 (extreme inequality).
- This marks a significant improvement from India's Gini score of 8 in 2011.
- Comparison with Peers:
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- India's Gini score of 25.5 surpasses China (35.7) and the United States (41.8).
- It also positions India ahead of every G7 and G20 nation in terms of income equality.
- Global Leaders in Equality: India is behind only the Slovak Republic (24.1), Slovenia (24.3), and Belarus (24.4).
- Category: India falls into the "moderately low" inequality category (Gini scores between 25 and 30) and is close to joining the "low inequality" group (below 25).
WHAT IS GINI INDEX?
- Definition: The Gini index, also called the Gini coefficient or Gini ratio, determines a nation's level of income inequality (or wealth distribution) across its population.
- Origin: It was developed in 1912 by Italian statistician Corrado Gini.
- Range: The coefficient ranges from 0 (or 0%) to 1 (or 100%):
- 0 (0%): Represents perfect equality (every person earns/has the same amount).
- 1 (100%): Represents perfect inequality (one person earns/has all the income, and the rest earn/have zero).
- Mathematical Basis (Lorenz Curve):
- The Gini coefficient is mathematically defined based on the Lorenz curve.
- The Lorenz curve plots the percentiles of the population (horizontal axis, ordered by income/wealth) against their cumulative income or wealth (vertical axis).
- The Gini coefficient is the ratio of the area between the line of perfect equality (a 45-degree diagonal line) and the Lorenz curve to the total area under the line of perfect equality.
- A larger area between the curve and the line of equality indicates higher inequality.
- Nature of Measurement: The Gini index is not an absolute measure of a country’s income or wealth.
- It only measures the dispersion or distribution of income or wealth within a population.
- A high-income country and a low-income country can have the same Gini coefficient if their income distribution patterns are similar.
KEY DRIVERS OF INDIA’S SUCCESS
A. Poverty Reduction:
- Significant Decline in Extreme Poverty: The World Bank's Spring 2025 Poverty and Equity Brief reveals:
- 171 million Indians were lifted out of extreme poverty between 2011 and 2023.
- The share of the population living on less than $2.15 per day (standard extreme poverty measure) plunged from 16.2% in 2011-12 to just 2.3% in 2022-23.
- Under the World Bank’s revised extreme poverty line of $3.00 per day, the rate for 2022-23 stands at a modest 5.3%.
- Broad-Based Reduction: Poverty reduction has been observed across both rural and urban areas.
- Rural extreme poverty fell from 18.4% to 2.8%.
- Urban extreme poverty reduced from 10.7% to 1.1%.
- The rural-urban poverty gap narrowed significantly from 7.7 percentage points to 1.7 percentage points.
- Lower-Middle-Income Poverty Line ($3.65/day): India's poverty rate at this line fell from 61.8% in 2011-12 to 28.1% in 2022-23, lifting 378 million people out of poverty.
TARGETED GOVERNMENT WELFARE SCHEMES & FINANCIAL INCLUSION
- Pradhan Mantri Jan Dhan Yojana (PMJDY): Instrumental in bringing over 69 crore Indians into the formal banking system (as of June 2025), facilitating direct benefit transfers and reducing leakages.
- Aadhaar: The backbone of India’s digital identity infrastructure, with more than 142 crore Aadhaar cards issued (by July 2025), ensuring precise delivery of government services and subsidies.
- Direct Benefit Transfer (DBT): Streamlined welfare payments, leading to cumulative savings of ?3.48 lakh crore as of March 2023.
- Ayushman Bharat Scheme: Offers health coverage of up to ?5 lakh per family annually.
- Over 41.34 crore Ayushman Cards issued, supported by a network of over 32,000 hospitals.
- Expanded to include all citizens aged 70 and above under the Ayushman Vay Vandana initiative, ensuring critical health support for the elderly irrespective of income.
- Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY): Provides food security support to over 80 crore people.
- Stand-Up India: Facilitated loans worth over ?62,807 crore to SC/ST and women entrepreneurs, promoting entrepreneurship.
- PM Vishwakarma Yojana: Nearly 30 lakh artisans have registered for financial and marketing support, empowering marginalized communities through skill development.
IMPLICATIONS & LESSONS FOR THE WORLD
- Balancing Growth and Equity: India's journey demonstrates that rapid economic growth and social equity can be achieved simultaneously.
- Blueprint for Inclusive Development: As nations worldwide grapple with widening inequality, India’s experience offers a blueprint for blending economic reforms with robust social protection systems.
- Addressing Poverty through Policy: The sustained and targeted policy focus on poverty reduction, financial inclusion, and social safety nets has been critical.
- Global Attention: India's model stands out as global attention turns towards inclusive development models, proving that prosperity can be more evenly shared.
DATA SUMMARY (WORLD BANK REPORT)
Country |
Gini Index |
Slovak Republic |
24.1 |
Slovenia |
24.3 |
Belarus |
24.4 |
India |
25.5 |
China |
35.7 |
United States |
41.8 |
Germany (G7) |
31.4 (approx.) |
United Kingdom (G7) |
34.4 (approx.) |
France (G7) |
32.4 (approx.) |
Japan (G7) |
32.9 (approx.) |
CONCLUSION
India's achievement as the world's fourth most equal society, with a Gini Index of 25.5, is a testament to its comprehensive strategy of combining economic expansion with social welfare. This significant progress, driven by massive poverty reduction and the effective implementation of welfare schemes, not only enhances the well-being of its vast population but also offers valuable lessons for other nations pursuing inclusive development.
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