Beyond Piketty: on income inequality 

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.