Despite income growth, persistent and pervasive poverty remain the most important features of the Indian economy. India is also characterised by high income inequality and a diverse economic structure with almost 90 per cent of the work force employed in the informal sector. In addition, the rural economy is affected by sharp seasonality. In such a situation, it is necessary to have elaborate methods of collection of data on household incomes that are sensitive to
specific local conditions. The Indian government, however, has given up on this important though difficult exercise of collecting data on household incomes.

In this paper, we review existing household incomes surveys and show that there are no reliable large-scale sources of data on household incomes (Section 2). We then discuss a methodological framework that we have developed for estimation of rural household incomes (Section 3). In Section 4, we present some features of income distribution based on findings from eight village surveys conducted using the approach outlined in the previous section. These village surveys show extremely high levels of income inequality. In the concluding Section 5, we argue that there is urgent need to undertake large-scale household income surveys in India.