Analysing India’s cycle of deprivation and affluence

Why in the News?

A recent analysis of income mobility using Consumer Pyramids Household Survey (CPHS) data highlights a worrying trend: between 2014 and 2025, downward mobility among Indian households has risen significantly, while upward mobility has not kept pace. The study suggests that inequality in India is better understood through income mobility – movements into and out of deprivation and affluence — rather than static poverty or inequality measures. The findings raise important questions about economic resilience, social justice, and the sustainability of growth in the context of widening vulnerabilities.

Background: Income Mobility as a Measure of Inequality

The analysis divides households into three groups based on their 2014 per capita income rank:

• Top 10%
• Next 40%
• Bottom 50%

Mobility is assessed relative to the 2014 position:

• Upward mobility: Movement to a higher income group
• Downward mobility: Movement to a lower group
• No change: Same income position

The data come from the Consumer Pyramids Household Survey conducted by the Centre for Monitoring Indian Economy, spanning 2014–2025

The period is divided into:

• 2014–19 (First term of the Modi government)
• 2019–24 (Second term; includes COVID-19 shock)

This framework captures dynamic income changes rather than static poverty levels.

Key Findings: A Tilt Towards Decline

All-India Trends

• Downward mobility nearly doubled: 14% (2015) → 26.8% (2025)
• Share of households remaining in the same group fell sharply.
• Upward mobility increased gradually (14.1% → 23.5%) but remained below downward movement.

By 2025:

• More than one in four households were worse-off relative to 2014
• This suggests an economy marked by growing vulnerability and uneven gains, rather than broad-based upward progress.

Rural–Urban Divide

Rural India

• Nearly 29% of rural households will be worse off by 2025.
• Sharpest deterioration in 2014–19.
• Vulnerability persisted post-2019.
  

Urban India

• Better performance relative to rural areas.
• Upward mobility improved faster.
• Yet downward mobility still increased.

Inference: Gains appear concentrated in urban centres, while rural households bore the brunt of volatility. Caste-Based Patterns: Persistent Social Fault Lines

The study shows:

• Downward mobility increased across all caste groups.
• Particularly sharp among OBCs and SCs.
• Around one-quarter or more of these households were worse-off by 2025.

For SC Households

• Pathways upward remained constrained.
• Upward mobility muted across the decade.

Scheduled Tribes (STs)

• Lower downward mobility.
• Some stronger upward episodes – possibly due to targeted interventions.

The findings reaffirm India’s historical caste-based structural inequality

Religious Mobility Patterns

• Downward mobility rose for both Hindus and Muslims.
• Upward mobility for Muslims remained weaker compared to Hindus.
• Sikh and Christian households experienced stronger early upward mobility, though it weakened later.
• Among Muslims, discrimination appears to restrict upward mobility more than causing a dramatic descent

Structural Inequality: The Deeper Story

A statistical analysis found:

• Higher district-level inequality is associated with greater downward mobility.
• Households in unequal districts are more likely to slip down.

Other determinants:

Positive mobility factors

• Education
• Urban location
• Larger household size (income pooling)

Negative mobility factors

• Belonging to historically disadvantaged castes
• Muslim identity
• Residence in high-inequality districts

Thus, inequality does not spur aspiration – it hardens economic boundaries

The 2019 Turning Point and COVID Shock

The year 2019 marked:

• A major electoral victory for the Bharatiya Janata Party.
• Soon followed by the COVID-19 pandemic.

The pandemic triggered:

• Collapse of informal sector employment
• Reverse migration
• Income shocks
• Health crises

The disruption persisted beyond the immediate health emergency, contributing to mobility stagnation

Challenges Emerging from the Findings

Rising Economic Insecurity

More households slipping down than climbing up signals structural fragility.

Entrenched Social Inequality

• Caste and religion remain decisive determinants of mobility.

Rural Distress

• Agriculture and informal rural sectors remain vulnerable.

Informal Sector Weakness

• Lack of a revival strategy for labour-intensive sectors.

Distrust and Social Frustration

• When aspiration weakens, social tensions rise.

Way Forward: Restoring Upward Mobility

Employment-Intensive Growth

• Strengthen MSMEs.
• Promote rural non-farm employment.
• Labour-intensive manufacturing.

Education and Skill Investment

• Universal quality schooling.
• Vocational training.
• Digital literacy for rural youth.

Public Health Strengthening

• Primary health infrastructure.
• Insurance coverage.
• Pandemic preparedness.

Social Protection Expansion

• Strengthen MGNREGA.
• Urban employment guarantees.
• Direct benefit transfers for vulnerable groups.

Address Discrimination

• Strict anti-discrimination enforcement.
• Equal opportunity policies.
• Affirmative action with monitoring.

Reduce Regional Inequality

• District-level targeted development.
• Infrastructure and connectivity expansion.

Conclusion

The analysis of income mobility between 2014 and 2025 reveals a troubling pattern: while some upward movement exists, downward mobility has grown more sharply. Rural households, SCs, OBCs, and Muslims face structural constraints in climbing the income ladder

An economy where more people are slipping down than rising up cannot sustain long-term social stability. Growth without mobility deepens frustration. Therefore, public policy must shift from headline GDP expansion to:

• Inclusive employment generation
• Social protection
• Anti-discrimination measures
• Strengthening human capital