World Inequality Report and Inequality in India (GS Paper-2, Poverty)
About
- World Inequality Report is launched by the Paris based World Inequality Lab. The report in the context of India is titled as, Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj.
Findings at the India Level:
- Inequality in India was at a lower level at the time of independence, like the top 1% got 11% of national income. This inequality went through a phase of decline till the 1980s on account of the socialistic policies of the then government, like the share of top 1% declined to 6%.
- But the 1980s marked a phase of transition from socialistic towards an open market economy model. This transition was completed with the launch of LPG reforms in 1991, thereby leading to skyrocketing inequality in India. Ex: The share of the top 1% in national income increased to 22%.
Income inequality in India
- Based on data from the National Sample Survey Organization’s (NSSO)3 consumption expenditure survey (CES) rounds in 1993-94 and 1999-2000, Deaton and Dreze ` (2002) found that economic inequality markedly increased during the 1990s in several forms – strong divergence across states, rising urban-rural inequality, and growing disparities within urban areas.
- Banerjee and Piketty (2005) were the first to mobilize annual tax tables provided by the income tax authorities in combination with national accounts to shed light on the dynamics of top incomes over the long run (1922-2000).
Wealth Inequality
- The literature on wealth inequality in India also takes off only in the 2000s. Perhaps the first comprehensive study of wealth distributions in India is found in Subramanian and Jayaraj (2006) who combine successive AIDIS rounds to study wealth inequality in India between 1991-92 and 2002-03. They report bottom 50% shares of 8% in 1991-92 and 2002-03 and top 1% shares of 15.7%.
- They also present an early attempt at combining surveys with data on the richest 178 households from a rich list published by ‘Business Standard’ to re-estimate wealth shares in 2002-03 – they find the top 1% share increased from 15.7% to 17.8%.
Other dimensions of inequality in India:
The income and wealth inequality in India also has intersections with other socio-economic markers of deprivation which are imminent in Indian society. For example;
- Gender: Women in India have remained under-developed in comparison to their male counterparts. Economically, women face hurdles like glass ceiling in jobs and promotions. For ex: According to the Opportunity Index Report, 85% working women in India believe that they have missed out on a raise, promotion or work offer because of their gender. Politically, women account for just around 14% of MPs in India and even when women are elected there are issues like Sarpanch Patis which hampers real women political empowerment of women.
- Caste: The IHDS findings state that untouchability is still practiced by around 27% of the households surveyed. According to IHDS (2011-12), 51% of Schedule Caste households have adult women with zero years of education and 27% for illiterate male members. For upper caste, it is 24% in case of women and 11% in case of men.
- Age, particularly old age: LASI survey has highlighted that 70% of elderly population is below the poverty line and face several forms of daily life activity limitations. This has put them on an unequal footing vis-a-vis their younger counterparts.
- Religion: Sachar committee has highlighted the backwardness among the Muslim communities in India in comparison to other religions in India.
- Region: Development divide between North-South states in India reflects the regional development deficit in India. For example, during covid pandemic, only 10% of the students in Bihar got access to digital education but in Kerala, this accessibility was around 90%.
- Ethnicity: Backwardness among the tribal communities in India vis-a-vis the mainstream population highlights the ethnic divide in development parameters. For ex: the tribals are over-represented in terms of population below poverty line, higher prevalence of malnutrition among them and then higher level of illiteracy too.
Reasons for persistence of inequality in India:
- LPG reforms: Capital intensive model of development has led to jobless growth in India, thereby intensifying the divide between the rich and poor. For ex: Before the LPG reforms, only one billionaire in India.
- Gaps in India’s Taxation: Abolition of Wealth Tax, loopholes in income tax regime etc allow the rich to effectively pay lower taxes than their fair share. This reduces the progressive nature of taxation and wealth distribution.
- Lower expenditure on social services: Expenditure on health and education has remained way below the recommended value. For ex: Around 3% of GDP on education as compared to the recommended value of 6%.
- Persistence of ascriptive identities: Gender, caste and religious discrimination have led to inequalities like 97% of manual scavengers are Dalits, lower female labor force participation rate and issues of religious communities such as Muslims.
- Criminalization of politics: With increasing criminalization of politics (43% of MPs have criminal records), potential of political schemes and decisions for upliftment of downtrodden sections has drastically reduced, thereby reducing the poor and downtrodden sections as a mere vote bank group.
Steps taken by the government
- PM Awas yojana for housing to all.
- Jal Jeewan Mission for clean drinking water facilities for all.
- Swachh Bharat Abhiyan to promote sanitation and minimum hygienic level among all.
- Saubhagya Yojana for access to electricity to all.
- PM Jan Dhan Yojana for financial inclusion, particularly of women through opening zero balance bank acounts.
- KIRAN scheme, CURIE scheme, Eklavya schools
- PM Matru Vandana Yojana, Janani Suraksha Yojana for better reproductive health of women.
- Nari Shakti Vandana Adhiniyam (106th Constitutional Amendment) for increasing the women representation by providing 33% reservation to women in Lok Sabha and State Legislative Assembly.
Conclusion
Going Forward, it is important for India to proceed with inclusive development lens so as to achieve SDGs along with the goal of Viksit Bharat Sankalp.
