3.1.

7 Nature, Extent and Magnitude of Inequalities of Income and The Indian economy reveals several
forms of economic inequalities. The three important Wealth In India forms are

1 Inequality of income and consumption

2 Inequality of Assets

3. Regional Inequality

(1) Inequality of Income and Consumption:

There is no official organisation in India to compile data on the personal distribution income. Moreover,
data relating to distribution of income in the country as a whole is not directly available.

(2) Nature and Extent of Inequalities in the Distribution of Wealth: (a) Distribution of Land Holdings:
There are a lot of inequalities in the distribution al

[A]land holdings. According to the 16 round of National Sample Survey, there is too mu inequality in the
distribution of land holdings in the villages, 30% of small farmers own 1 of land holdings. On the other
hand, 30% of medium farmers own 30% of land holdings and 10% of rich farmers own more than 56% of
land. 20% of the farmers have no land at all

[B] ownership of Resident Buildings: Distribution of wealth in urban areas is still Worse. According to the
8h round of National Sample Survey, upper 20% of households in as owned 93% of the total urban land.

(C) Ownership of Shares: In India, inequalities concerned with share property are still more alarming.
According to Mahalanobis Committee, 10% of the richest tax payers earn of the total dividend income.
According to the Research Bureau of Economic Times, in India 20 business houses have assets worth
more than 43,535 crores in 89-90.

(3) Regional Inequalities:

Regional inequality is an important aspect of economic inequality in India. There are large regional
variations in the level of development,

3.1.8 Causes of Inequality of Income and Wealth in India

1 inequality in the Ownership of Land:

The main cause of inequality in wealth and income in India has been the Zamindari system and
inequality in the ownership of und. Prior to independence. Zamindari system was widely prevalent India
As a result of it there was grave inequality in the ownership of land. In the post independence era,
although Zamindari system was abolished, yet there is no material reduction in the inequality of the
ownership of land. .

2 Private Ownership of Industries:

In urban areas. there is private ownership of property like industries, trade, land houses, etc. Some
people own large properties in these areas. On the other hand, large population living in urban sector is
poor. In this sector, capitalists by investing their capital in industries trade, transport and other
occupation earn handsome income.

3. Inflation: Prices have been rising in India since 1956. Rising prices hit hard the classes. Their real
income has therefore gone down. Inflation is thus also for aggravating inequalities of real income.

4. Unemployment: According to the Mahalanobis Committee, unemployment and underemployment

are important factors for inequality of income in India. In a stateof unemployment one is deprived of all
sources of income.

5. Tax Evasion:

Widespread tax evasion is responsible for all inequalities in the distribution of wealth. The officials
responsible for the collection of taxes are not efficient. Consequently, people succeed in evading the tax.
They either do not pay any tax or pay much less than the actual tax due.