Mint Quick Edit | Gini: A dim lamp casts weak light on inequality

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Subscribe to enjoy similar stories. India’s latest survey of household consumption expenditure, carried out from August 2023 to July 2024, found a decline in the “Gini coefficient" of consumption inequality since the same period of 2022-23.

This should be good news, except that it may partly reflect a dip in such spending among the top 5%. But then, it’s unclear how well this study captures top-end extravagance.

Moreover, the Gini coefficient isn’t always a helpful indicator for such a populous country. If one plots the proportion of total spending (along the vertical axis of a graph) by groups against their percentage of total homes (on the flat axis), say from the least spending 1% to the most, then a straight 45° incline would show perfect equality: i.e., every percentile slice spends the same.

In reality, the curve bulges below that line, as low-percentile homes spend much less than upscale ones. The size of this bulge below the equality line tells us the Gini count.

While income and especially wealth numbers would show bigger Gini bulges than consumption, unless we have reliable data on the top 0.1%, this measure casts dim light on actual inequality. Better data should be part of our 2025 wish-list.