Analysing India’s cycle of deprivation and affluence

“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.

The state of households

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.

The contrast suggests that whatever gains have materialised are more concentrated in urban centres, while rural households bear the brunt of economic volatility. Far from a story of broad-based inclusion, the evidence points to a widening experience of insecurity — one that sits uneasily with vociferous claims of steadily falling inequality.

Caste patterns

The caste-wise patterns are equally revealing — and troubling. Since 2014, downward mobility has risen across all social groups, with particularly sharp increases among Other Backward Classes (OBC) and Scheduled Caste (SC) households. By 2025, roughly a quarter or more of households in each of these groups are worse- off than they were in 2014. While upward mobility has improved for the Unreserved and OBCs, it remains muted and uneven for SCs across the entire period.

For SC households, the constraint appears less about dramatic descent and more about the persistent narrowing of pathways upward. The steepest rise in downward mobility occurs in the first subperiod (2014-19), even as upward mobility loses momentum in the years thereafter. This sits uneasily with repeated assertions by the ruling party and the Prime Minister about shrinking inequalities and expanding opportunity.

At the same time, there has been considerable social churn, with the ruling party broadening its base — particularly among OBCs and sections of upper castes in States such as Uttar Pradesh — reshaping traditional hierarchies of influence within the broader caste landscape. Our analysis echoes a longer history of caste-based deprivation in India — where occupational segmentation, unequal access to assets and education, and entrenched social discrimination continue to shape economic outcomes.

Scheduled Tribes display comparatively lower downward mobility and some episodes of stronger upward movement, possibly reflecting targeted interventions and regional development efforts. Yet, the broader message is unmistakable: caste remains a decisive fault line in income mobility, and the promise of equal economic ascent remains illusory.

Relative to 2014, downward mobility rises across all religious groups, with the rise being more pronounced among both Hindu and Muslim households over time. Upward mobility increases steadily for Sikh and Christian households, often outpacing downward movements in several years, while gains for Hindu and Muslim households are more gradual, indicating uneven mobility trajectories across religious groups by 2025. Among Hindus and Muslims, downward mobility spikes around election years, while upward mobility rises more modestly. For Muslims in particular, the rise in upward mobility remains weaker than for Hindus. Again, discrimination against Muslims has restricted their upward mobility and not so much their downward mobility. Sikh and Christian households display stronger upward mobility in the earlier years, though this momentum weakens in the latter half of the decade.

The story is about entrenched inequality

While the headline numbers point to growing downward mobility, a more rigorous statistical analysis reinforces the same conclusion. After accounting for household characteristics, we find that higher income dispersion at the district level is systematically associated with greater downward mobility. In other words, households located in more unequal districts are more likely to slip down the income ladder than to climb up.

Inequality, far from spurring aspiration, appears to harden economic boundaries. The results also echo familiar social fault lines: households from historically disadvantaged caste groups and Muslims exhibit significantly lower mobility, while education, urban location and larger household size are associated with better prospects. The deeper story, then, is about entrenched inequality shaping who moves ahead — and who falls behind.

That 2019 marked a turning point is not surprising as the Bharatiya Janata Party secured a historic victory in the general election. But, soon after, the government had to deal with the catastrophic COVID-19 pandemic that caused massive humanitarian and economic crises. Their inept handling means that the disruption persisted long after the pandemic ceased.

Reckless pursuit of Hindutva without a coherent strategy to revive the informal sector including agriculture, lower increase in upward income mobility while resilience among certain segments — including OBCs and SCs as well as Muslims — helped slow their descent into deprivation. So, perhaps resilience in the face of adversity matters too.

The larger concern is that an economy in which more households are slipping down than climbing up cannot sustain social stability for long. When inequality hardens into reduced mobility, frustration replaces aspiration. Therefore, policy must move beyond headline growth and focus on strengthening public health, education, employment-intensive sectors, and social protection. Policies addressing discrimination are not matters of welfare alone — they are central to restoring mobility and renewing faith in economic progress.

Nidhi Kaicker is Associate Professor, B.R. Ambedkar University, Delhi. Vani S. Kulkarni is Research Affiliate, Population Studies Centre, University of Pennsylvania, Philadelphia. Raghav Gaiha is Visiting Scholar, Population Aging Research Centre, University of Pennsylvania, Philadelphia