India, July 17 -- The recent decline in India's consumption-based Gini coefficient - from 28.8 in 2011-12 to 25.5 in 2022-23, as reported by the World Bank - has prompted considerable scrutiny, particularly when juxtaposed with income-based estimates from the World Inequality Database (WID), which peg India's Gini at an ostensibly alarming 62 in 2023. This necessitates a closer interrogation of the underlying metrics, data sources, and conceptual frameworks.

At the core of this divergence is a critical conceptual distinction: The difference between consumption inequality and income inequality. In a country like India - characterised by a large informal workforce, extensive in-kind transfers, and a rapidly expanding welfare architecture -...