India: Highly Unequal Country in the World

Usually, consumption expenditure-based inequality is lower(between 0.05 and 0.07 Gini coefficients) when compared with income-based inequality. But, in the case of India, because of underestimation of the tail of the distribution of consumption expenditure (i.e. exclusion of consumption expenditure of very rich and very poor, by the National Sample Survey Organization-NSSO), the gap between consumption expenditure and income-based inequality increases to about 0.173 Gini coefficients. In 2012 consumption expenditure-based inequality was 0.36, as against 0.54 Gini points inequality based on income. Thus, if underestimation of the tail of the distribution of consumption expenditure (the exclusion and very rich and poor) and about 0.173 Gini points gap are taken into account, then consumption expenditure-based inequality figures for India become comparable with inequality figures for the rest of countries of the world. The India Human Development Survey (IHDS) conducted by the University of Maryland (USA) and the National Council of Applied Economic Research (NCAER) collected data on income. Based on income data from IHDS for 2011-12, inequality in India was estimated at 0.54 Gini points, which places India among very high unequal countries. Village-level studies based on primary data also show high inequality in India, with the Gini coefficient ranging between 0.50 and 0.70. The wealth inequality, with a Gini coefficient of 0.74 was even higher when compared with inequality based on income,and or consumption expenditure.