What are the findings about India's economic progress in the World Inequality Report 2018? Discuss the reasons for the high and persistent income inequality in the country.
Published: January 2, 2018
The world inequality report of 2018 revealed that the top 1% of the income earners in India received 22% of the total income. Analysing the previous reports, we can see that there is a significant increase in this share since 1980s. It has grown from mere 6% in early 1980s to 22% in 2018. The share of top 10% earnings is almost 56% of the total. Inequality in India has been growing. The reasons for this irrational growth of inequality are,
Economic liberalisation: The report stated that the inequality increased significantly since the economic liberalisation. Report shows that the top 10% earn more than the bottom 50%. The top earners continued to earn more and more after the state intervention in production stopped. The socialist policies were replaced by liberal policies. The lack of strong control by the government and the market competition conditions led to the increase in income of the already top earners.
Poor education, healthcare and skill training: : The bottom population couldn’t expand their potential to earn more because government has not provided adequate resources to them. Over the years, the expenditure on education and health has never been significant in India. The poor is not given proper opportunity to learn and acquire the required skills to earn more. These conditions let the poor be poor.
Concentration of capital: Private capital is being concentrated in the hands of very few. This is causing the gap to increase. Rigid caste system can also be a reason for the increase of income among a certain section of the society.
Regional and Inter-state inequality: Certain regions in the country have developed at a better rate than a few other regions. for example, Mumbai has grown leaps and bounds in the past few decades but, the North Eastern states still remain poor and underdeveloped. Better facilities for education and skill training are available in Mumbai in comparison to North East. Thus, inequality exists among the people’s income of both regions.
Tax regulations: A normal government employee abides by the tax regulations. Tax evasion is mostly the case of rich with humungous amount of wealth. Progressive taxation in India implies, more the income, more is the tax to be paid. To avoid huge tax shares, citizens find loopholes to evade tax. This can be a reason for the accumulation of wealth with a certain section of people.
Unemployment: The worsening conditions of employment in the country with increasing unemployment is one of the root cause of inequality. Lack of opportunity to work and earn is causing inequality. Trained professionals are not able to find a place to work.
India should provide the basic infrastructure for every citizen to learn and there by increase one’s income. A more inclusive growth with an equal opportunity for all will provide better results in decreasing the growing inequality gap.
Model Questions Category: 049 - Issues Relating to Poverty and Hunger