India’s per capita GDP has grown five times in last two decades, however the income distribution is highly uneven. In this context, discuss the issue of rising inequality in India.

August 13, 2023 February 22, 2024

Certainly, India has witnessed many changes and a rapid GDP growth in last two decades. However, the income is concentrated in few hands. India’s Gini coefficient value hovers around 0.9 on the Lorenz curve, where the value 1 is perfect inequality and 0 is perfect equality.

Reasons behind rising Economic Inequality:

  • High dependence on agricultural sector which contributes only 16% to GDP but employs 43% of Indians. On contrast, the service sector contributes 55% and employs 23%.
  • Even in agriculture inequality is on rise. Top 14% farmers own more than 86% of cultivable land.
  • Economic development is uneven across different regions of country.
  • Social inequalities based on caste and gender further enhances economic inequality.
  • Commercialization of education creates disparities in education, making it a privilege for a select few further enhancing economic inequalities.
  • Failure of the welfare state leads to economic inequality.
  • Increase in regressive indirect taxation.

Consequences:

  • The market becomes a monopoly of a few and labour remains a mere commodity.
  • Security problems like Naxalism and Regionalism.
  • The vicious cycle of social and economic inequality.
  • Increase in incidence of multidimensional poverty and fall in human development.
  • Failure of the state to reap the benefits of demographic dividend.

Required Measures:

  • Emphasis on progressive taxation instead of regressive one.
  • Appropriate utilization of corporate social responsibility funds.
  • Expanding the manufacturing base and generating indigenous employment.
  • Making agriculture more productive.
  • Rationalization of subsidies and decreasing exclusionary problems.
  • Improving avenues of skill development and vocational training.

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