The Gini index, also known as the Gini coefficient or Gini ratio, is
a measure of income or wealth inequality within a population. It ranges from 0 to 1 (or 0% to 100%), with 0 representing perfect equality (everyone has the same income/wealth) and 1 representing perfect inequality (one person has all the income/wealth).
What is the Gini Index?
⦁ The Gini index, or Gini coefficient, is a measure of how evenly income or wealth is distributed in a population. It ranges from 0, where everyone has the same income, to 1, where one person has all the income.
⦁ For example, a country like Norway has a low Gini index (around 22.7%), suggesting low inequality, while South Africa has a high Gini index (63%), indicating significant inequality. This metric is crucial for understanding economic disparities.
How is it Calculated?
⦁ Developed by
Italian statistician Corrado Gini in 1912, It is calculated using the Lorenz curve, which plots the cumulative percentage of the population against their cumulative share of income.
⦁ The Gini index is the ratio of the area between this curve and the line of perfect equality to the total area under the line. While the exact math involves complex formulas, it essentially compares how far actual income distribution deviates from perfect equality.
Why is it Calculated?
The Gini index is calculated to provide a standardized measure of inequality, enabling:
Policy Evaluation: Governments use it to assess the effectiveness of policies aimed at reducing inequality, such as taxation, subsidies, and welfare programs.
Cross-Country Comparisons: It allows for comparisons of inequality levels across nations, helping identify global trends and best practices.
Economic Analysis: High Gini indices are associated with slower GDP growth, reduced income mobility, increased household debt, political polarization, and higher poverty rates [World Population Review, 2025
What are the data Sources?
Gini values derived from primary household surveys (national agencies, World Bank).
High-income nation data from Luxembourg Income Study.
Maintained by the Spring 2025 Poverty & Equity Brief (World Bank)
India’s Gini Score & Ranking
Recent reports, like those from the World Bank, show India's Gini index at 25.5 in 2022-23, ranking it fourth globally in income equality, down from 28.8 in 2011.
This improvement is linked to reduced poverty (from 16.2% to 2.3%) and government schemes like PM Jan Dhan Yojana.
Limitations
Ignores wealth inequality, doesn't highlight income extremes, regional/caste/gender gaps; doesn’t directly measure poverty.
Fun Facts
Zero is Utopia, 100 is Dystopia
A score of 0 means perfect equality (everyone earns the same), and 100 means one person owns everything. In real life, no country hits these extremes—most hover between 25 to 60.
Even Developed Countries Struggle
Surprisingly, the USA, a developed nation, has a higher Gini score (41.8) than India (25.5 in recent World Bank data). More money ≠ more equality.
QuizzesQ. Which of the following statements best describes the Gini Coefficient?
A) It measures the poverty line threshold of a country.
B) It represents the level of inflation in an economy.
C) It quantifies income or wealth inequality within a country.
D) It is used to assess the level of unemployment.
Join the Discussion! 💬
Can a single number like the Gini Coefficient truly capture the complexity of inequality in a diverse country like India?"
Discuss the limitations of the Gini Index in reflecting socio-economic disparities. What alternative indicators or approaches can provide a more holistic understanding of inequality? Share your thoughts below! 👇
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