The latest World Inequality Report — authored by co-director of the World Inequality Lab, Lucas Chancel, along with economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman — makes for a sobering read. It details the rising levels of income and wealth inequality across countries. As far as income is concerned, the richest 10 per cent of the global population currently takes 52 per cent of global income, whereas the poorest half of the population earns 8.5 per cent of it. The picture is worse when it comes to wealth inequalities.
India is one of the worst performers. “India stands out as a poor and very unequal country, with an affluent elite,” states the report. While the top 10 per cent and top 1 per cent hold respectively 57 per cent and 22 per cent of total national income, the bottom 50 per cent share has gone down to 13 per cent. While the lowest 50% had an average national income of 53,610, the wealthiest 10% earned more than 20 times that, at 11,66,520.

Major issues
• It is not just the inequality in income and wealth that plagues India. The report also points to extreme gender and carbon inequality.
• At 18 per cent the female labour income share in India is one of the lowest in the world — only slightly higher than the average share in the Middle East (15 per cent) and significantly lower than the average in Asia (21 per cent, excluding China).
• Similarly, a person in the bottom 50 per cent of India’s population is responsible for, on average, five times fewer emissions than the average person in the bottom 50 per cent in the European Union and 10 times fewer than the average person in the bottom 50 per cent in the US. Inequality is so high in the country that when India is removed from calculations, the global bottom 50 per cent income share rises.

Reasons for inequality

• Inequality of Income: According to Oxfam’s study, “Public Good or Private Wealth?”, India’s top 10% owns 77.4 percent of the entire national wealth, while the top 1 percent owns 51.53 percent. Only 4.8 percent of the national wealth is held by the poorest 60% of the population. For the previous 15 years, 13.6 crore Indians, or the poorest 10% of the population, have remained in debt. India’s Gini coefficient of wealth was 0.83, placing it among the countries with the highest inequality.
• Gender: Economic involvement and opportunity, health and survival, educational achievement, and political empowerment are the four factors used to measure gender disparity. According to the International Labor Organization, the gender wage gap is greatest in India, where women are paid 34% less than males. Women comprise over 42 per cent of the agricultural labour force in the country, yet they own less than 2 percent of its farm land according to the India Human Development Survey (IHDS).
• Religion: Religious identities have an important role in an individual’s ability to mobilise resources. Religious identities may lead to biases, which can lead to economic exclusion and other types of discrimination, affecting work and livelihood chances. While Christians, Parsis, and Jains have a greater percentage of income/consumption than their population share, Muslim and Buddhist groups have much less access to economic resources.
• Caste: Caste is significant factor for determining access to resources like education, income, health valued by individuals. India’s upper caste households earned nearly 47% more than the national average annual household income, the top 10% within these castes owned 60% of the wealth within the group in 2012, as per the World Inequality Database.
• Ethnicity: Tribal communities in India have been classified as ethnic groups due to their distinct culture, language, dialect, geographical location, rituals, and so on. According to the National Family Health Survey 2015-16 (NFHS-4), 45.9 percent of the ST population was in the lowest wealth group, compared to 26.6 percent of the SC population, 18.3 percent of OBCs, and 9.7 percent of other castes.

Consequences of inequality

• Poor development indices such as IMR and MMR, low per capita income, poor education and learning results in schools, and a high rate of population increase can all be attributed to existing socioeconomic disparities.
• Inequality in the economy has a negative impact on public healthcare and education. Upper and middle-class people have no vested interest in well-functioning public healthcare and education since they can afford private healthcare and education.
• Poor development indices such as IMR and MMR, low per capita income, poor education and learning results in schools, and a high rate of population increase can all be attributed to existing socioeconomic disparities.
• Inequality in the economy has a negative impact on public healthcare and education. Upper and middle-class people have no vested interest in well-functioning public healthcare and education since they can afford private healthcare and education.
• Religious disparity creates a sense of marginalisation among religious minority groups. This diminishes their engagement in mainstream society. Because religious minorities have a big population in India, their economic exclusion jeopardises the nation’s GDP development as a whole.
• Inequalities tend to produce social conflict among social groups, for example, caste groups such as Jaats, Maratha, and Patels are demanding reservations, but this demand is opposed by caste groups who already benefit from reservations; such clashes of interest due to perceived inequality tend to produce violent conflicts between opposing caste groups.
• Inequality among ethnic groups has sparked a slew of ethnic movements calling for independent states, autonomous regions, or even outright independence from India. Numerous ethnic movements, such as Nagas for Greater Nagalim, have shook the North East.

Measures

• Civil Society Promotion- Give previously oppressed and suppressed groups a stronger voice, especially through allowing civil society organisations such as unions and associations to form within these groups.
• Scheduled castes and tribes should be encouraged to become entrepreneurs, and programmes such as Stand up India should be developed to broaden their reach by boosting financing.
• Provision of the Constitution- The Constitutional Guarantee of Equality is being enforced. Articles 14, 15, and 16 are part of a plan for the Constitutional Right to Equality.
• Religious Minorities’ Inclusion- Religious minority groups require special attention in the form of representation in government jobs, institutional credit, improved educational access, protection of their human rights through the establishment of a National Commission for Minorities, and the strengthening of the rule of law, among other things.
• Taxation that is progressive- More public resources for public services will be generated through increasing progressive taxes on the rich and boosting the effective taxation of companies, as well as extending the tax base through greater surveillance of financial activities.
• Policies for the Economy- Inequality may be decreased significantly by giving universal access to publicly financed high-quality services such as public health and education, social security payments, and employment guarantee systems. The inability to expand manufacturing sectors such as textiles, clothing, vehicles, consumer products, and so on is a major cause of growing inequality. Labor-intensive industry has the ability to absorb millions of people abandoning farming, but the service sector benefits mostly the urban middle class.
• Empowerment of Women- Gender equality policies include reserving seats in legislatures, increasing reservation at the local self-government level (both urban and village) to 50% in all states, strict implementation of the Equal Remuneration Act of 1976 to eliminate wage disparities, gender-sensitive education curricula, raising awareness about women’s rights, changing social norms through schemes such as Beti Bachao Beti Padhao, and so on.

India has committed to achieving the Sustainable Development Goals and ending extreme poverty by 2030. According to Oxfam, if India can keep inequality from expanding further, it would be able to eliminate extreme poverty for 90 million people by 2019. If it goes even farther and decreases inequality by 36%, it has the potential to practically abolish severe poverty.

How to structure:

1. Give an intro about India’s income inequality
2. Discuss the reasons for it. Give multi- dimensional reasons
3. Suggest way forward
4. Conclude

Reference:

1. https://indianexpress.com/article/opinion/editorials/rising-income-inequality-cause-of-concern-7664854/