An article based on the World Bank’s 2026 Poverty and Inequality Platform reveals some startling figures about India’s income distribution: the richest 10 per cent of Indians have incomes closer to those of the poorest 10 per cent in OECD countries than to those of the middle of the income distribution in rich countries.
One can quibble about the exact numbers and how the comparison shifts once incomes are adjusted for purchasing power parity—a rupee would go much further in India than a euro does in Germany. But the larger point remains: despite three decades of rapid economic growth, India has a long way to go. The only durable path to lifting our living standards is to make the whole pie much bigger.
Our policy focus on inequality
Much of the public debate in India has focused on income inequality. This is understandable. Social media brings us a steady stream of lavish weddings and foreign holidays, while a short walk through almost any neighbourhood, or the vulnerability of our domestic worker’s finances to even minor health issues, reveals deprivation close by. It is not surprising that this disparity sits uneasily with many of us. In fact, the data suggests that the top 1 per cent holds 40 per cent of all wealth. The inequality fault line in India is a small sliver between the very top and everyone else. It raises important questions about the design of our welfare policies: whom they reach, whom they miss, and what they actually provide.
But as the World Bank data shows, the focus on inequality misses a larger point: even the richest 10 per cent of Indians are not very rich by world standards. This is brought home by another remarkable project—a set of video recordings of 100 Indian households, each chosen to represent a given percentile of the income distribution.
Browsing through these homes is a wake-up call, especially for relatively affluent urban Indians who think of themselves as comfortably placed. Homes that sit high up the national distribution are often a far cry from what most of us would imagine: modest rooms, few appliances, and little financial cushion against a medical emergency.
Much of the country lives in conditions those in the top percentiles rarely see up close. Were we to adjust these numbers for the quality of the air we breathe and the water we drink, even the richest 10 per cent would look worse off than they do.
A well-off family in Delhi may own two cars and send its children to private schools, but it breathes the same toxic air in November as everyone else, and drinks water that must first pass through a purifier. The Indian middle class may have its braggadocio about being far ahead of our neighbours, but if this data is any guide, we are not that far ahead. The distance between a middle-class household in Delhi and its counterpart in Dhaka is far smaller than we would like to believe.
All of this suggests that even those who care deeply about inequality must worry about growth. Redistribution matters, but redistributing a small pie cannot make a poor country prosperous. If the top 10 per cent are themselves modest earners by global standards, there is only so much to take from them.
On economic growth
This brings us to the question of what economic growth is, and how we get it. Simply put, growth means increasing the size of the pie—producing more from the same amount of inputs. What India needs is growth that is broad-based: growth that creates millions of productive jobs and raises the incomes of the millions in the middle and at the bottom.
There is no single lever for such growth. Aggressive taxation of the top 1 per cent would raise a modest sum relative to what India needs to spend on schools, health, cities and infrastructure, and that tax base could shrink as capital and people move elsewhere in response to high taxation. Taxing the super rich does not make for a sustainable development strategy.
Growth at all costs is no answer either: an economy that poisons its air and drains its water will find that the costs eventually catch up. Growth built on rules that are bent for a few cannot last, because it erodes the very trust and competition on which lasting prosperity depends.
It takes many parts working together: investment in people and their health, simpler regulation, a more capable state, and deeper integration with global trade. Capital and talent flow to their most productive uses only when people trust that individual initiative will be rewarded, contracts will be honoured, property rights will be protected, and disputes will be settled quickly and fairly. Predictable rules, applied equally to all, provide a solid foundation for economic aspiration.
The World Bank’s figures should unsettle our comfortable assumptions. While India’s inequality is real, the deeper problem is that most Indians—including many of us who consider ourselves well off—remain poor by global standards. Caring about inequality and caring about growth are not rival positions. The way to honour our concern for the poorest Indians is to build an economy in which ordinary Indians live as well as ordinary people in the rich world.
Renuka V Sane is managing director at TrustBridge, which works on improving the rule of law for better economic outcomes for India. She tweets @resanering. Views are personal.
(Edited by Prashant Dixit)