India’s Gini Coefficient

Gini coefficient represents the income distribution of a country’s residents. It was developed by the Italian statistician and sociologist Corrado Gini. It measures the inequality. The coefficient ranges from zero to one, with zero representing perfect equality and one showing perfect inequality. The higher is the Gini Coefficient, more is gap between rich and poor in a country. If the value of Gini Coefficient is 1, it implies that all wealth of that country belongs to one person and everybody else is poor. The 0 value of Gini Coefficient implies that all people have exactly equal wealth. Practically, the Gini Coefficient value falls between 0 and 1 for all the countries.

India’s Gini Coefficient

In India, National Sample Survey does not collect data on income, because people deliberately don’t tell their income when asked during data collection. The Gini coefficients cited are from NSSO is based on consumption expenditure rather. (This simply implies that inequality in distribution of income will be more than inequality in distribution of consumption expenditure). The only organization that provides income distribution data is National Council of Applied Economic Research (NCAER), through the National Survey of Household Income and Expenditure (NSHIE). Last time, the NSHIE was done in 2004-05. NSHIE showed a Gini coefficient of 0.466 in 2004-05. In recent times, the People Research on India’s Consumer Economy (PRICE) survey called ICE (India’s Consumer Economy) had come up a Gini coefficient with income distribution data at 0.386. If we take both data correct, we can say that income inequality has declined in last 10 years.