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Beyond Piketty: on income inequality
Context:
- With state elections being just a stone throw away, debate on the Indian economy has become increasingly focused.
- It has been demonstrated that rising income inequality is a by-product of growth in the developed world.
Poverty and inequality:
- It is plausible that poverty reduction slowed in 2016-17 because of deceleration of income growth.
- And huge shocks of demonetisation and the GST to the informal sector have aggravated income inequality.
- In sum, regardless of the longer-term outlook and presumed but dubious benefits of the policy shocks, the distress of large segments of the Indian population was avoidable.
Conclusion:
- Both demonetisation and GST, are guaranteed to yield long-term benefits, regardless of large-scale hardships, loss of livelihoods, closure of small and medium enterprises and slowdown of agriculture.
- But critics reject these claims lock, stock and barrel.
- Lack of robust evidence is as much a problem for the official proponents of these policies as it is for the critics.
- Hence the debate continues unchanged with frequent aggressive incidences.
