This article evaluates the progress in literacy among the Indian states, from an age-cohort perspective. It argues that age-cohort analysis offers a robust understanding of the dynamics of literacy progress. The article clearly brings out the fact that, despite the accomplishment of universal elementary education, achieving the goal of full literacy is quite difficult, owing to the existence of an out-of-school-age illiterate population. Thus, the study suggests provision of an effective adult-literacy programme along with universal elementary education in order to realize the goal of full literacy. Further, it argues that comparisons based on the average literacy rate have led to a computation of a "literacy deprivation index" adjusted with age structure--and that such adjustment leads us to view the literacy gap across all the states as wider, given that it assumes lower values. This minimal standardization, along with the age structure of the population, offers a valid comparison of this commonly used indicator. Its prospect of progress, too, is largely dependent upon the emerging age structure of the population as a result of the unfolding demographic transition.