India’s Inequality Debate: HCES 2023-24 Gini at 0.29

Why in the news

An analysis questioned the official view that inequality has eased significantly. Using HCES 2023-24 data, it argued that policy assumptions are out of step with the situation of rural and informal workers, at a time when MGNREGA is being replaced under the 2025 Bill named Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin).

Key facts

• Gini index: 0.29 from HCES 2023-24, versus 0.25 estimated by the World Bank.
• Urban-rural gap: cities are more unequal than villages; the urban top 10% spend 9 times what the rural bottom 10% do.
• Non-food spending: inequality is far sharper here (services, durables) than in food; the urban top decile makes up 27% of it.
• Missing superrich: NSS surveys probably understate inequality because they miss the very top of the wealth ladder.
• Class trends: since the 1980s urban managers and professionals gained the most, while informal and agricultural workers lagged.

Why non-food spending matters

Food intake has a natural ceiling, even for the rich. Spending on luxuries, education, healthcare and travel has no such limit, so it reveals concentrated purchasing power better.

Concerns

• If the new Bill rests on the belief that rural distress has vanished, support may be too thin.
• Rural MPCE is far below the national average, so dropping a guaranteed safety net could trigger welfare crises.
• Consumption growth may be fragile if fuelled by debt-led consumption rather than rising real wages.

Background concepts

• Lorenz Curve: a graph of income or wealth distribution; the Gini Index is derived from it. A curve lying farther from the equality diagonal means a larger Gini and more inequality.
• Deciles: splitting a population into ten equal 10% groups, to compare richest and poorest.
• Debt-led consumption: spending sustained by borrowing instead of higher earnings.

Exam angle

• Survey used: Household Consumer Expenditure Survey (HCES) 2023-24; Gini 0.29 vs World Bank 0.25.
• Researcher cited: Vamsi Vakulabharanam, who noted agricultural workers and small farmers lagging behind since the 1980s.
• Related terms: MPCE, Lorenz Curve, deciles, between-group inequality.