Horizontal and Vertical Inequalities in India

This chapter examines income inequality in India. LIS income data for India confirm that the income inequality in India (with a Gini of 0.48) is in the same range as for other low- and middle-income countries. Earlier estimates for Indian inequality have been lower because they were based on expenditure data. Separate estimates for 22 Indian states and state groups reveal a wide range of both income levels and income inequality. All Indian states have lower incomes and more income inequality than any high-income LIS country. Across Indian states, income inequality is not closely related to income levels; nor are income inequality and income levels closely related among high-income countries. Nevertheless, because all high-income LIS countries have lower income inequality than any Indian state or other middle-income country, globally there is a strong negative correlation linking lower incomes with more inequality.