By Dr. Gyan Pathak
Only five months after the Union Government had boasted in July 2025 that India was among the world’s fourth most equal country, the World Inequality Report 2026 has found that inequality in the country remains among the highest in the world. Not only that, little improvement was witnessed in the recent years in this regard.
The World Inequality Report 2026 released by World Inequality Lab says, “The top 10%of earners capture about 58% of national income, while the bottom 50% receive only15%. Wealth inequality is even greater, with the richest 10% holding around 65% of total wealth and the top 1% about 40%. The income gap between the top 10% and the bottom 50% remained stable between 2014and 2024. Average annual income per capita is around 6,200 euros (PPP), and average wealth stands at about 28,000 euros (PPP).Female labor participation remains very low at 15.7%, showing no improvement over the past decade. Overall, inequality in India remains deeply entrenched across income, wealth, and gender dimensions, highlighting persistent structural divides within the economy.”
Press Information Bureau (PIB) release of the Union Government of India in July had said that India ranks as the world’s fourth most equal country, an assertion that was shared by many Ministers of the Union of India and the ruling BJP leaders on social media. The official government release stated that India had a Gini Index of 25.5 (as of 2022 data), which places it in the “moderately low inequality” category and makes it the fourth most equal country globally, ahead of major economies like the US (41.8) and China (35.7).
The government’s claim was based on the World Bank’s Spring 2025 Poverty and Equity Brief, which used consumption data, not income data, to calculate the Gini coefficient. A Gini index based on consumption typically shows a rosier picture of inequality than one based on income. In brief, it was a data jugglery.
It should be kept in mind that India feeds over 800 million people by supplying free foodgrains, and provide several other facilities, such as free medical, educational, and subsidised products and services, and manipulated the data to show how consumption has improved. The government then impressed upon international organisations such as ILO and Word bank to make improved consumption the basis of their reports to measure inequality. It is on the basis of such consumption, the World Bank ranked India the fourth most equal country in the world.
However, the World Inequality Lab, made the income, not the consumption, the basis of measuring inequality. And they are right. Free foodgrains, medicines, education, or subsidized things does not make a poor a rich person, but only make their life a little more tolerable. Inequality between the poor and the rich is not removed at all. The poor remained poor, and the rich becoming riches as the data show. Therefore, income must be the basis of measuring the inequality among people.
The Modi government’s claim then faced significant criticism from the opposition parties and economists for being “intellectually dishonest” and “fraudulent”. They highlighted that the use of consumption data can be misleading, as income typically varies much more widely than consumption, especially among the very rich who may not be fully captured in such surveys. It was pointed out even at that time, if measured on the basis of income India would have ranked much lower around 176th out of 216 countries in inequality in the world.
The World Inequality Report 2026 says that in1980, the global elite was overwhelmingly concentrated in North America & Oceania and Europe, which together accounted for most of the world’s top income groups. Latin America also had some presence near the top, but China and India were almost entirely confined to the bottom half of the distribution. At that time, China had virtually no presence among the global elite, while India, Asia in general, and Sub-Saharan Africa were heavily concentrated in the very lowest percentiles.
By 2025, the picture looks markedly different. China’s position has shifted upward: much of its population has moved into the middle 40%, and a growing share has entered the upper-middle segments of the global distribution. This is also true for other Asian countries. India, by contrast, has lost relative ground: in 1980, a larger part of its population was in the middle 40%,but today almost all are in the bottom 50%.India’s middle remains in the lower levels, while China’s earns a larger share.
The WIR 2026 puts the data in historical perspective which shows that ultra-small countries, with populations under 100,000, have consistently recorded per capita incomes well above the world average since 1970, and their relative advantage has widened over time. By 2024, their incomes stand at around four times the global average. By contrast, the only category with incomes persistently below the world average is the very largest countries, those with more than 500 million inhabitants, namely China and India.
The diversity of outcomes highlights how inequality interacts with national contexts. In India, caste and religious identities significantly overlap with income and education divides, the report emphasized. The average income (PPP) of the top 1 per cent in India is 140,649 euro, while their average wealth was 1,128,435 euro as against income and wealth of the bottom 50 per cent 940 euro and 1801 euro only. (IPA Service)
