Caste, a stratifying axis of the Indian society, is associated with wealth and health. However, to what extent caste‐based health inequality is explained by wealth disparities, is not clear. Therefore, we aimed to examine the caste‐based differences in anaemia (haemoglobin < 11 gm/dl) and self‐reported sickness absenteeism in schoolchildren and the mediating role of economic disparity. Students (n = 1764) were surveyed from 54 government schools of Dhenkanal and Angul, Odisha state. Socioeconomic data, anaemia and absenteeism were recorded. The relative risks of anaemia among Scheduled Tribe (least advantaged) and Scheduled Caste (second least advantaged) students were 1.19 (95% CI: 1.08, 1.26) and 1.13 (1.03, 1.20), respectively, as compared to students of the most advantaged caste and that for sickness absenteeism were 2.78 (2.03, 3.82) and 2.84 (2.13, 3.78); p < 0.05, with marginal attenuation when controlled for inter‐caste economic disparities. Caste had an independent effect on anaemia and sickness absenteeism in school children, unexplained by inter‐caste economic disparities.