In this paper an attempt has been made to work out the extent of inequalities in the distribution of household income among the rural households in Himachal Pradesh. Economists have put a lot of time and attention into researching income inequality. The relevance of the problem has fluctuated over time, with many academics and policy professionals preferring to focus on absolute poverty rather than total income distribution. There are two broad concepts of poverty: relative poverty and absolute poverty. The relative poverty is measured in the terms of inequality in the distribution of income; whereas, absolute poverty is reckoned in terms of some kind of notion of subsistence considered appropriate to the circumstances of the country concerned. Income equality, on the other hand, is significant because of the consequences for social and political growth. Income equality is widely recognized as a means of ensuring a country's stability.