India has cut multidimensional poverty by more than half in under a decade, yet a small sliver of its population now holds a bigger share of national income than almost anywhere else in the world. That contradiction sits at the heart of any serious conversation about poverty and inequality in India. The two ideas get used interchangeably in everyday conversation, but they describe different problems, move at different speeds, and often need different solutions.
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Poverty and inequality are not the same thing
Poverty is about falling short of a minimum standard of living. It means not having enough income, food, shelter, healthcare, or education to live with basic dignity. Inequality is about the gap between people, regardless of whether the poorest have crossed that minimum threshold or not. A country can, in theory, push everyone above the poverty line while the distance between its richest and poorest citizens keeps growing. That is more or less what has been happening in India.
How poverty is measured
India’s official yardstick is the National Multidimensional Poverty Index (MPI), built with technical support from the Oxford Poverty and Human Development Initiative. Instead of relying only on income, it looks at deprivation across health, education, and living standards, using twelve weighted indicators such as nutrition, years of schooling, sanitation, and access to clean cooking fuel. A person counts as MPI-poor if they are deprived on a third or more of these indicators at once.
How inequality is measured
Inequality, by contrast, is usually tracked through income and wealth shares: how much of the national pie goes to the top 1%, the top 10%, or the bottom 50% of the population. This is the approach used by the World Inequality Lab, the research group founded by economists including Thomas Piketty, which compiles long-run data on who owns what in the Indian economy.
What the numbers actually show
On the poverty front, the trend looks genuinely encouraging. A NITI Aayog discussion paper found that multidimensional poverty fell from 29.17% in 2013-14 to 11.28% in 2022-23, which works out to roughly 24.82 crore people moving out of poverty in about nine years. Rural India saw the sharper improvement: poverty there dropped from 32.59% to 19.28% between 2015-16 and 2019-21, compared with a fall from 8.65% to 5.27% in urban areas over the same period, according to the government’s own release on the findings.
Inequality tells a very different story. According to the World Inequality Report 2026, India’s top 10% of earners capture about 58% of national income, while the bottom 50% receives only around 15%. Wealth concentration is even sharper: the richest 10% hold roughly 65% of total wealth, and the top 1% alone controls about 40%. Separate long-run research by the World Inequality Lab found that by 2022-23, India’s top 1% held 22.6% of national income and 40.1% of national wealth, both historic highs that place India among the most unequal major economies in the world, ahead of countries like Brazil and South Africa on this measure.
| Group | Share of national income | Share of national wealth |
|---|---|---|
| Top 1% | 22.6% | 40.1% |
| Top 10% | ~58% | ~65% |
| Bottom 50% | ~15% | Well under 10% |
How inequality deepens poverty
Poverty and inequality are distinct concepts, but they are not unrelated. Inequality shapes who gets access to the things that help a person escape poverty in the first place: good schools, reliable healthcare, formal employment, and credit. When wealth and opportunity concentrate at the top, the poor are not just behind, they face a steeper climb to catch up. A child from a low-income household competing for a seat in a good college is not just poorer in income terms. They are also more likely to have attended an under-resourced school, lacked access to private tuition, and had parents with less bargaining power in the job market.
This is why economists increasingly treat poverty and inequality as linked through opportunity, not just income. Persistent inequality in education and healthcare access tends to trap the same households in poverty across generations, even as average national income rises.
The role of social hierarchies and discrimination
In India, this dynamic is sharpened by caste. Research published in a peer-reviewed study on wealth accumulation found that even when Dalit and upper-caste individuals reach the same level of education, their wealth outcomes remain unequal, pointing to discrimination in labour markets rather than a simple lack of access to schooling. Dalits and other historically marginalised groups are often paid less for the same work and remain disproportionately represented in low-paid, casual labour, regardless of qualification. This means that closing the education gap alone does not automatically close the income or wealth gap. Discrimination operates as an additional barrier layered on top of economic disadvantage.
Can economic growth alone fix this?
India’s GDP has grown rapidly over the past three decades, and that growth has clearly helped reduce poverty, as the MPI numbers show. But growth on its own has not narrowed inequality. In fact, the same research that tracks India’s top 1% income share found that it is now higher than during the most unequal period of colonial rule, even though the economy today is far larger and more modern. The number of Indian billionaires rose sharply between the 1990s and the 2020s, and their combined wealth as a share of national income grew just as fast.
This matters because it shows that a rising tide does not automatically lift all boats equally. Growth expands the total resources available, but how those resources get distributed depends on policy choices: taxation, labour laws, land ownership patterns, and the strength of the social safety net. Left unmanaged, growth can just as easily concentrate gains among those who already hold capital, land, or education, while the poor benefit only marginally.
Why targeted policy still matters
Reducing poverty and reducing inequality require different policy levers, even though both are necessary for genuine development. Some of the tools that specifically target inequality, rather than just poverty, include:
- Progressive taxation: Taxing higher incomes and wealth at higher rates to fund public services that benefit lower-income groups.
- Affirmative action: Reservation policies in education and government employment aimed at correcting historical caste-based exclusion.
- Public investment in health and education: Ensuring that quality schooling and healthcare are not dependent on a family’s ability to pay.
- Direct income support: Cash transfers and employment guarantee schemes that put a floor under household income, independent of the broader growth rate.
- Land and labour reform: Addressing unequal ownership of productive assets like land, which continues to shape rural income gaps.
The MPI data shows that targeted schemes around nutrition, sanitation, and cooking fuel have played a real role in bringing down deprivation, even in states that started from a low base, such as Uttar Pradesh, Bihar, and Madhya Pradesh. This suggests that well-designed, targeted interventions can move the needle on poverty faster than growth alone. But similar targeting has been far less visible on the inequality side, which is why income and wealth concentration have kept rising even as poverty has fallen.
The bigger picture
Poverty and inequality often get treated as if solving one automatically solves the other. India’s own recent history suggests otherwise. Multidimensional poverty has fallen sharply, lifting hundreds of millions of people above a basic threshold of deprivation. At the same time, income and wealth have become more concentrated at the top, not less. Both things can be true simultaneously, and policymakers who focus only on poverty reduction risk missing the structural inequality that keeps re-generating poverty in the next generation, particularly along caste, gender, and rural-urban lines.
What do you think? If a country can sharply reduce poverty while inequality keeps rising, has it really solved its development problem? And should policies like reservations and progressive taxation be judged by how much they reduce poverty, or by how much they reduce the gap between the richest and poorest?
References
- https://ophi.org.uk/national-mpi-directory/india-mpi
- https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1996271®=48&lang=2
- https://www.newsonair.gov.in/over-13-crore-people-lifted-out-of-poverty-in-5-years-between-2015-16-and-2019-21-says-niti-aayog/
- https://m.thewire.in/article/political-economy/in-charts-world-inequality-report-2026
- https://wid.world/news-article/inequality-in-india-the-billionaire-raj-is-now-more-unequal-than-the-british-colonial-raj/
- https://pmc.ncbi.nlm.nih.gov/articles/PMC11449120/
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