[Answered] Examine the relationship between rising income inequality and corruption in India. How does economic disparity influence corruption, particularly in the intersection of government and business? What measures can be taken to address these issues effectively? (250 words)
Red Book
Red Book

Introduction: Contextual Introduction

Body: Relationship between inequality and corruption and measures to address this.

Conclusion: Way forward

The relationship between rising income inequality and corruption in India is intricately linked, with economic disparity acting as a significant driver of corrupt practices, particularly at the intersection of government and business.

Interplay Between Inequality and Corruption

  • Incentive for Corruption: A widening wealth gap creates a fertile ground for corruption. Individuals from lower socioeconomic strata, facing economic hardships, may be more susceptible to bribery or other corrupt practices
  • Weakened Institutions: High levels of inequality can erode trust in government institutions. When people perceive the system as unfair and biased towards the wealthy, it undermines the legitimacy of laws and regulations.
  • Political Influence: Economic disparity can translate into political influence, as wealthy individuals and corporations often have greater resources to lobby for favorable policies and regulations.  

Influence of Economic Disparity on Corruption

  • Concentration of Wealth and Power: As highlighted in the Gallup World Poll (GWP) Survey and the Centre for Monitoring Indian Economy (CMIE)’s Consumer Pyramid Household Survey, the rising wealth inequality in India has created a powerful elite that exerts substantial influence over political and economic processes, often through corrupt means.
  • Corruption in Government-Business Nexus: The study highlights that economic inequality fuels corruption within the government-business nexus, where public officials and private investors engage in corrupt practices to further their interests.

Measures to Address Income Inequality and Corruption

  • Taxation and Redistribution: Progressive taxation and effective wealth redistribution are essential to reducing the economic disparities that fuel corruption.
  • Trust in the Judiciary: The study finds that a higher conviction rate enhances trust in the judicial system, which in turn acts as a deterrent to corrupt practices.
  • Speculative Investments vs. Savings: The study reveals that income inequality in India has been largely fueled by speculative investments, such as mutual funds, which benefit the wealthy disproportionately. In contrast, more conservative savings options, like fixed deposits (FDs) and post office savings, tend to curb inequality.

Conclusion

Rising income inequality in India has a profound impact on the levels of corruption, particularly in the intersection of government and business. Only by tackling the root causes of inequality can India hope to reduce corruption and build a more equitable society.

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