Infographics 2025

Income Inequality in India: Evolving Urban-Rural Dynamics and Convergence Trends

Rajesh Shukla

The 90th to 50th Percentile Ratio reveals evolving trends in income inequality across urban and rural India. Urban areas historically displayed higher inequality, with a peak ratio of 7.4% in 1953-55, reflecting a substantial income gap between top earners and the median. Over the decades, urban inequality gradually declined, reaching 3.9% by 2022-23, though fluctuations, particularly during the 2020-21 pandemic surge (7.1%), highlight its vulnerability to economic disruptions.

Rural India began with a more equitable distribution (3.6% in 1953-55) but experienced rising inequality, peaking at 6.3% in 1967-68. Subsequent decades saw some improvement, with the ratio declining to 3.7% by 2013-14. However, the pandemic caused a sharp rise to 6.3%, followed by a decrease to 4.7% in 2022-23. While urban inequality has generally been more pronounced, rural areas have shown greater volatility. The convergence of rural and urban ratios in recent years underscores income disparity as a nationwide issue, shaped by regional and systemic factors.