ECONOMICS

(Assignment)

WHAT DO YOU MEAN BY INEQUALITY?

WRITE A SHORT NOTE ON INEQUALITY IN INDIA.

SUBMITTED TO: SUBMITTED BY:

DR. ARUN KESHAV SHRUTI GUPTA

ASST. PROFESSOR B.A.LL.B(H)

AMITY UNIVERSITY 4 TH SEM.

Income Inequality is an extreme disparity of income distributions with a high concentration of
income usually in the hands of a small percentage of a population. When income inequality
occurs there is a large gap between the wealth of one population segment compared to another.
There can be varying types of income disparity segregations and analysis used to understand
income inequality. 

Income inequality and income disparity segregations can be analyzed through a variety of
segmentations. Segmentations of income disparity analysis are used for analyzing different types
of income distributions. Income distributions by demographic segmentation form the basis for
studying income inequality and income disparity.

The different types of income segmentations studied when analyzing income inequality may
include distributions for:

 Male vs. female

 Ethnicity
 Geographic location
 Occupation
 Historical income

Income inequality in India refers to the unequal distribution of wealth and income among its
citizens. According to the CIA World Factbook, the Gini coefficient of India, which is a measure
of income distribution inequality, was 0.352 in 2011, ranking 95th out of 157. Wealth distribution
is also uneven, with one report estimating that 54 percent of the country's wealth is controlled by
millionaires, the second highest after Russia as of November 2016. The richest 1% of Indians
own 58.4% of wealth. The richest 10 % of Indians own 80.7 % of the wealth. This trend is going
in the upward direction every year, which means the rich are getting richer at a much faster rate
than the poor. Inequality worsened since the establishment of income tax in 1922, overtaking the
British Raj's record of the share of the top 1% in national income, which was 20.7% in 1939–40.

Even as the Indian economy has grown over the last two decades, the growth has been more
unequal in the country than in most other parts of the world, showed data included in the United
Nations’ Human Development Report 2019. The latest edition of the report focused on
‘Inequalities In Human Development 2019’.Income inequality based on the top 10 percent’s
income share has risen since 1980 in most regions but at different rates, the report said. The rise
was extreme in the Russian Federation, which has become one of the most unequal countries in
terms of income distribution in just five years. The rise was also pronounced in India and the
U.S., though not as sharp as in the Russian Federation. In China, after a sharp rise, inequality
stabilized in the mid-2000s, the report said.

For India, inequality worsened the most between 2000 and 2007. During this period, income
growth for the top 1 percent of earners in the country grew 213 percent, while the average
growth was 122 percent and income growth for the bottom 40 percent of income earners was 58
 percent. This divergence narrowed a bit between 2007 and 2018. During this period, income
growth of the top 1 percent fell to 78 percent and average income growth declined to 68 percent.
In contrast, income growth for the bottom 40 percent rose 41 percent.

The report also pointed to the ‘horizontal inequality’ that continues to exist in India.The study
noted that those belonging to Scheduled Castes, Scheduled Tribes and Other Backward Classes
underperformed the rest of the society across human development indicators, including education
and access to digital technologies. For instance, the percentage of population with 5 or 12 years
of education across Scheduled Tribes, Scheduled Caste and Other Backward Classes remained
below other sections of society. Similarly, the proportion of those who have access to telephones
and computers remained lower for these three sectors, though mobile phone penetration was high
across all segments of society. Since 2005-06, however, there has been a reduction in inequalities
in basic areas of human development.“

“For example, there is a convergence of education attainment, with historically marginalized

groups catching up with the rest of the population in the proportion of people with five or more
years of education. Similarly, there is convergence in access to and uptake of mobile phones,”
the report said. It said there had been an increase in inequalities in enhanced areas of human
development, such as access to computers and to 12 or more years of education. “Groups that
were more advantaged in 2005-06 have made the most gains, and marginalized groups are
moving forward but in comparative terms are lagging further behind, despite progress.”

India being such a vast country it is nearly impossible to remove income inequality completely.
However situation can be improved to some extent by taking a few measure to curtail income
inequality.

Measures to Deal with Inequalities

 Constitutional Provision
o Enforcement of Constitutional Guarantee of equality as enshrined in fundamental
rights. Articles 14, 15 and 16 form part of a scheme of the Constitutional Right to Equality.
Article 15 and 16 are incidents of guarantees of Equality, and gives effect to Article 14.
 Promoting Civil Society
o Provide a greater voice to traditionally oppressed and suppressed groups,
including by enabling civil society groups like unions and association with in these groups.
 o Scheduled castes and Scheduled tribes should be motivated to become
entrepreneurs, schemes like Stand up India need to be expanded to widen its reach by
increasing funding.
 Women Empowerment
o For gender equality policies like affirmative action by reserving seats in
legislatures, increasing reservation at Local self government both at Urban and village level
to 50% in all states, strict implementation of The Equal Remuneration act,1976 to remove
wage gap, making education curriculum gender sensitive, raising awareness about women
right, changing social norms through schemes like Beti Bachao Beti Padhao etc.
 Inclusion of Religious Minorities
o Religious minority groups need special attention through representation in
government jobs, provision of institutional credit, improvement of their education access,
protection of their human rights by empowering National commission for Minority,
strengthening rule of law etc.
 Progressive Taxes
o Additional public resources for public services by progressive taxes on wealthy
more and by increasing the effective taxation on corporations, more importantly broadening
the tax base through better monitoring of financial transactions.
 Economic Policies
o By ensuring universal access to public funded high quality services like Public
health and education, social security benefits, employment guarantee schemes; inequality can
be reduced to great extent.
 Employment Generation
o The failure to grow manufacturing sectors like Textile, Clothing, automobiles,
consumer goods etc. is the important reason of rising inequalities.
o The Labor-intensive manufacturing has the potential to absorb millions of people
who are leaving farming while service sector tend to benefit majorly urban middle class.