Gini Coefficient
The Gini Coefficient is a statistical measure of income or wealth inequality within a population, ranging from 0 (perfect equality, where everyone earns the same) to 1 (perfect inequality, where one person owns everything).
Developed by Italian statistician Corrado Gini in 1912, the coefficient is derived from the Lorenz Curve—a graphical representation that plots the cumulative share of income received by the cumulative share of the population, ranked from poorest to richest. The Gini Coefficient is the ratio of the area between the Lorenz Curve and the diagonal line of perfect equality to the total area under the diagonal.
India's Gini Coefficient has been a subject of significant debate. Based on consumption expenditure surveys, India's Gini has generally been estimated in the 0.35–0.40 range, which places it in the moderate-inequality bracket globally. However, wealth inequality—as opposed to income or consumption inequality—is considerably higher. Oxfam's India Inequality Reports have repeatedly highlighted that the wealthiest 1% of Indians owned a disproportionately large share of national wealth in the years covered by their surveys.
The measurement itself is complicated by data limitations. India's large informal economy, underreporting of incomes among both the very poor and the very rich, and the long gap between Household Consumption Expenditure Surveys (the last comprehensive survey before the 2023–24 HCES was conducted in 2011–12) have made tracking inequality difficult in real time.
For market participants and macro analysts, the Gini Coefficient matters as a structural indicator. High and rising inequality can constrain mass consumption, create social tension, and influence government policy—particularly towards populist redistributive measures such as free food schemes, cash transfers, or agriculture loan waivers. Conversely, a narrowing Gini can signal growing middle-class purchasing power, which is positive for consumer discretionary stocks and retail finance.
The coefficient is one of several tools economists use alongside the Human Development Index, poverty headcount ratios, and wage growth data to paint a comprehensive picture of how the benefits of economic growth are distributed across the population.