India’s Gini Index, which is measured using household consumption data, has declined over the past decade. On the surface, this suggests a narrowing inequality gap, but the picture is partial. A closer look reveals how measures of inequality can sometimes obscure widening absolute gaps and this calls for a broad-based understanding.Let’s begin by understanding what the Gini Index really measures. The Lorenz curve (OLE, Figure 1) captures the income distribution within a population positing the cumulative share of income against the cumulative share of population, arranged from poorest to richest.
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