World Bank claim of falling inequality in India masks deep structural gaps, says CFA

The advocacy group Centre for Financial Accountability (CFA) has raised serious concerns over a recent World Bank brief that cites a decline in India’s consumption-based Gini coefficient — from 28.8 in 2011–12 to 25.5 in 2022–23 — portraying it as a sign of growing equality. According to CFA, the data offers a misleading picture of socio-economic reality on the ground.

While a lower Gini coefficient typically suggests reduced inequality, CFA cautions that this metric has limitations, particularly in a country like India. The Gini index, it points out, is most responsive to changes in the middle of the income distribution and fails to capture disparities at the top and bottom ends — where inequality is often most pronounced. Moreover, both the richest and the poorest sections are often left out or underrepresented in surveys, weakening the reliability of such aggregate figures.

“Figures like these are increasingly symbolic, rather than substantive,” CFA notes, pointing to a broader erosion of statistical transparency and institutional independence in recent years. This, it argues, has contributed to a growing trust deficit, with official claims of rising equality often used to promote a narrative of national success that overlooks deep-rooted inequalities.

CFA further highlights the consequences of policy choices such as the 2019 corporate tax cut, which led to an estimated revenue loss of ₹1.45 lakh crore annually. At the same time, investment in essential public services like health and education remains inadequate. India’s public health expenditure stands at just 1.8% of GDP — well below the World Health Organization's recommended 5% — while spending on education has remained below 3% of GDP, despite a long-standing national target of 6%.

Meanwhile, the informal sector — employing over 85% of India’s workforce — remains vulnerable, with stagnating or declining wages despite reported economic growth. Welfare schemes like MNREGA have seen budgetary reductions, and the increasing reliance on Aadhaar-linked payments has, in some cases, added delays and exclusions to much-needed assistance.

CFA argues that the core problem is structural, not statistical. “While India appears to grow more equal in spreadsheets and bar graphs, the on-ground reality tells a different story,” the organisation states. Until inequality is addressed as a matter of redistribution and justice — rather than a technical issue to be adjusted through selective metrics — progress will remain misleading and superficial, it adds.

The statement serves as a call for deeper scrutiny of how data is used to shape public perception and policy, urging a shift toward addressing the foundational issues that perpetuate economic and social divides.

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