This paper attempts to analyze the depth of poverty and examines the causal relationship between disability and poverty among Indian elderly. We use 58th round of National Sample Survey Organisation (NSSO) data surveyed in 2002. Our analysis finds higher level of poverty and income inequality among disabled elderly as compared to non-disabled elderly and those differences in the income levels vary significantly across different age groups, gender, social groups and educational status. Finally, the estimation results confirm the hypothesis of causal relationship between poverty and disability.