Wednesday, July 09, 2025
Consuming equally.
"India is not only the world's fourth largest economy; it is also one of the most equal societies today. According to the World Bank, India's Gini index stands at 25.5, making it the fourth most equal country in the world, after the Slovak Republic, Slovenia and Belarus." pib.gov.in. "A Gini index of 0 represents perfect equality (everyone with the same income), while an index of 100 implies perfect inequality (one person has all the income). World Bank. "India's score is much lower than China's 35.7 and far lower than the United States, which stands at 41.8." True, but India's GDP per capita is estimated at $2,878, that of China at 13,687 and the US at $89,105 by the IMF in 2025. wikipedia. So, is it better to have an equal distribution of poverty, or a relatively unequal distribution of much higher income at all levels? Actually, The World Bank Brief says, "India's consumption based Gini index improved from 28.8 in 2011-12 to 25.5 in 2022-23," whereas "the World Inequality Database shows income inequality rising from a Gini of 52 in 2004 to 62 in 2023." The Wire. Consumption inequality is much less because the rich tend to save more and an individual's ability to consume would surely be limited by biology. CEO salaries have soared to hundreds of times that of the median salary of workers. TOI. "The average pay for CEOs in India has reached $2 million a year (Rs 169.2 million), according to a new study by...Oxfam." ET. Whereas, "According to Glassdoor, the average base pay in India is INR 9,45,489 per year, and it can range from a minimum of INR 8,000 per month to a maximum of INR 1,43,000 per month." Forbes. At Rs 1,43,000 the maximum base pay works out to Rs 1.716 million per year, almost one-hundredth of Rs 169.2 million average for CEOs. "India's richest now hold more wealth than the country's entire colonial elite ever did - a staggering 40.1% - while the bottom half of the population clings to just 6.4% - according to a new analysis by research analyst Hardik Joshi." BT. "The bottom line of India Inc has surged nearly three times faster than GDP since FY20," and "Data showed that corporate profit as % of GDP has climbed to 6.9% in FY25 from 1.9% in FY20." BT. "A Mint analysis of 285 BSE-listed companies, excluding BFSI firms, showed a 12% year-on-year jump in total cash holdings to Rs 5.09 trillion in FY25." "More firms are keeping between 25% and 50% of assets in liquid form, reflecting low confidence in demand revival." However, "dividend payouts rose 11% to Rs 4.9 trillion in FY25 - the highest in a decade and higher than the 9.5% profit growth." FE. Low demand means low consumption and so, with 950 million now covered by at least one social security scheme (TOI) our Gini coefficient of consumption is excellent. It's the income Gini which is wide. Nearly 100 times.
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