07-07-2025
Knowledge Nugget: World Bank ranked India among ‘most equal countries': How is it relevant for UPSC Exam
Take a look at the essential events, concepts, terms, quotes, or phenomena every day and brush up your knowledge. Here's your knowledge nugget for today on Gini Index 2025.
(Relevance: UPSC frequently asks questions on reports and indices. The key takeaways from these reports are also essential fodder for your Mains examination for intricate points. In 2012, a question was asked on the Multidimensional Poverty Index; in 2019, the question was on the Global Competitiveness Report. Therefore, it becomes important to know about the indices and reports that are in the news.)
India has emerged not only as the world's fourth-largest economy, but also as one of the 'most equal countries' globally, according to a new World Bank report that places the country just behind the Slovak Republic, Slovenia, and Belarus. In this context, let's know about the Gini Index and key highlights of World bank's report.
1. The Gini Index has placed India in the fourth position with a score of 25.5, much lower than countries like China (35.7), the USA (41.8), and the United Kingdom (34.4). It is also more equal than every G7 and G20 country, many of which are considered advanced economies.
2. Out of the 167 countries for which the World Bank has released data, the Slovak Republic with a score of 24.1 is ranked in first position among the most equal countries.
3. According to the report, India falls into the 'moderately low' inequality category and is just a fraction away from joining the 'low inequality' group, which includes countries like the Slovak Republic (24.1), Slovenia (24.3), and Belarus (24.4).
4. Notably, a recent World Bank report — 'The Spring 2025 Poverty and Equity Brief' — also highlighted that India has successfully lifted 171 million people out of extreme poverty.
5. The Gini Index measures the extent to which the distribution of income or consumption among individuals or households within an economy deviates from a perfectly equal distribution. In simpler terms, it provides a clear picture of how evenly income is distributed within a country.
6. The index ranges from 0 to 100 — a Gini Index of 0 represents perfect equality, while an index of 100 implies perfect inequality. The higher the Gini Index the more unequal the country.
7. The data for the Index is based on primary household survey data obtained from government statistical agencies and World Bank country departments. Data for high-income economies are mostly from the Luxembourg Income Study database.
The Gini index, or Gini coefficient, was developed in 1912 by Italian statistician Corrado Gini. The index is based on the difference between the Lorenz curve (the observed cumulative income distribution) and the notion of a perfectly equal income distribution.
After understanding the Gini Index and the World Bank's latest report, let's also know the recently revised global poverty line by the World Bank — a topic that has sparked much discussion lately.
8. The World Bank recently revised its threshold poverty line to $3 a day (daily consumption of less than $3) from the earlier $2.15 a day. With the revised poverty line, the extreme poverty rate for India declines sharply to 5.3 per cent in 2022-23 from 27.1 per cent in 2011-12. In absolute terms, people living in extreme poverty fell from 344.47 million to just 75.24 million, latest data from the World Bank shows.
9. Poverty line is the level of income used as a cut-off point for deciding who is poor in any economy. It represents the minimum income level necessary to meet basic needs, and varies across countries depending on their overall economic conditions. It is important to note here that the context (both time period and location) is critical to arriving at a meaningful poverty line.
10. Despite the World Bank revising its extreme poverty line to adjust for global inflation in 2021 prices, India seems to have fared well, with the poverty numbers holding good. At $3 a day threshold, India's extreme poverty rate for 2022-23 rises from 2.3 per cent (at a poverty line of $2.15 a day) to 5.3 per cent, the World Bank estimates.
1. Recently, the United Nations Development Programme (UNDP) released its latest Human Development Report (HDR) titled 'A matter of choice: People and possibilities in the age of AI.' The report shows how Artificial Intelligence (AI) could reignite development.
2. The report noted the widening gap in inequality between countries with low Human Development Index (HDI) scores and those with very high HDI scores for the fourth consecutive year, highlighting a stark reversal of a historical trend where such inequalities were decreasing.
3. HDI is composite index that measures average achievement in human development taking into account four indicators: life expectancy at birth (Sustainable Development Goal 3); expected years of schooling (SDG 4.3); mean years of schooling (SDG 4.4); and gross national income (GNI) per capita (2017 PPP$) (SDG 8.5).
4. In HDI 2025, Iceland is ranked first with an HDI of 0.972, while South Sudan is ranked last with an HDI of 0.388.
5. India shows steady upward movement in the HDI rankings, ranking 130 in the 2025 UNDP report. The country's HDI value rose from 0.676 in 2022 to 0.685 in 2023, placing India in the medium human development category and bringing it closer to the high human development threshold (HDI ≥ 0.700).
Source: UNDP's HDR 2025
6. The report noted that India's HDI value has increased by over 53% since 1990, showing a growth faster than both the global and South Asian averages. The targeted social protection and welfare programmes, and economic growth are cited as reasons for the progress.
7. According to the report, India has been placed in a unique position globally as a rising AI powerhouse with the highest self-reported AI skills penetration. The report pointed out that 20 per cent of Indian AI researchers are now choosing to stay in the country – up from almost none in 2019.
(1) Consider the following statements:
1. A Gini Index of 0 represents perfect equality, while an index of 100 implies perfect inequality.
2. The higher the Gini Index the more unequal the country.
3. The index is based on the difference between the Lorenz curve and the notion of a perfectly equal income distribution.
How many of the statements given above is/are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
(2) Consider the following statements with reference to the Human Development Report:
1. The Human Development Report is published by World Bank.
2. India is in the medium human development category with an HDI value of 0.685.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
(Sources: Top 10 most equal countries in the world and India's rank in it, UNDP's HDR 2025)
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Roshni Yadav is a Deputy Copy Editor with The Indian Express. She is an alumna of the University of Delhi and Jawaharlal Nehru University, where she pursued her graduation and post-graduation in Political Science. She has over five years of work experience in ed-tech and media. At The Indian Express, she writes for the UPSC section. Her interests lie in national and international affairs, governance, economy, and social issues. You can contact her via email: ... Read More
