Analysing India’s cycle of deprivation and affluence Premium

Movements into and out of deprivation and affluence are of considerable interest

“It was the best of times; it was the worst of times”, wrote Charles Dickens in A Tale of Two Cities. This sums up the state of affairs in India in the past decade or so. Of particular interest here is the income mobility of different segments of the population which reveals sharp upward and downward shifts between 2014 and 2025. Those experiencing downward mobility among the poor suffer humiliation, hunger, morbidity, infant and child mortality, while the affluent experiencing upward mobility flaunt their wealth in ostentatious living, speculative investments in real estate, business ventures, and high risk gambling. So, movements into and out of deprivation and affluence are of considerable interest. All these changes are likely to influence income distribution that cannot be captured through poverty and income inequality measures. Instead, we demonstrate below that analysis of income mobility during the period 2014-25 yields richer insights into income distributional outcomes. The overall picture has shades of grey but it is not counterintuitive.

Households are grouped each year into three income categories based on their 2014 per capita income rank: the top 10%, the next 40%, and the bottom 50%. Income mobility is defined as movement across these groups relative to a household’s 2014 position — downward (to a lower group), no change (same group), or upward (to a higher group).

To assess whether elections mattered, the period 2014-2025 is divided into two sub-periods, 2014-19 and 2019-24, each anchored around a national election year. Our analysis draws on real (inflation-adjusted) per capita income data from the Consumer Pyramids Household Survey conducted by the Centre for Monitoring Indian Economy, spanning 2014-2025. We construct a balanced panel of households that are consistently observed across these years.

At the all-India level, the share of households experiencing downward mobility nearly doubles — from 14% in 2015 to 26.8% in 2025 — while the proportion remaining in the same income group falls sharply from over 70% to below half. Upward mobility does increase over time, rising from 14.1% to 23.5%, but this improvement is gradual and consistently trails the rise in downward movement. What stands out is not just mobility, but its direction: the balance tilts increasingly towards decline rather than ascent. By 2025, more than one in four households are worse-off relative to their 2014 position. The data suggest an economy marked less by broad-based upward progress and more by growing vulnerability and uneven gains.

The rural trends are particularly sobering. By 2025, nearly 29% of rural households are worse-off than they were in 2014, while the share that remained in the same income group has fallen below half. Although some upward movement is visible, especially in the early years, it is consistently outpaced by the rise in households slipping down the income ladder. The sharpest deterioration occurs in the first subperiod (2014-19), but the vulnerability persists thereafter.

Urban India fares somewhat better, yet, the picture is hardly reassuring. Downward mobility rises here too, albeit more gradually than in rural areas, even as upward mobility improves at a faster pace than in the countryside.