Real challenge with inequality in India

Source: The post real challenge with inequality in India has been created, based on the article “Balanced development: Spatial inequality must be addressed” published in “Business standard” on 11th June 2024

UPSC Syllabus Topic: GS Paper1-society-poverty and developmental issues

Context: The article discusses how recent data shows a decline in inequality in India, as measured by the Gini coefficient. However, it argues that this data may not fully capture the inequality among the affluent. The real issue is spatial inequality between different states.

For detailed information on Status of Inequality in India read this article here

What is the current status of inequality in India?

1. Decline in Gini Coefficient: The Gini coefficient, measuring inequality, has decreased in both rural and urban areas. Rural areas saw a drop from 0.283 in 2011-12 to 0.266 in 2022-23, and urban areas from 0.363 to 0.314.
2. Spatial Inequality: Significant consumption disparity exists between states and between rural and urban areas. For instance, Chhattisgarh shows an 82% difference in MPCE between rural and urban areas.

For more information on Gini coefficient read this article here

What is the real challenge with inequality in India?

1. The primary challenge with inequality in India is spatial disparity between regions and states.
2. The gap in consumption between rural and urban areas is stark, with a nearly 71% difference in average monthly per capita consumption expenditure (MPCE) at the national level.
3. Disparities between states are also significant. For example, rural Tamil Nadu’s MPCE is nearly double that of Jharkhand, and urban Telangana’s MPCE is over 70% higher than in Bihar.

What should be done?

1. To address spatial inequality, the central government should provide increased fiscal support to poorer states. These states often lack sufficient revenue for development and require resources allocated through mechanisms like the Finance Commission or direct federal support.
2. There is a need for strategic policy interventions in lagging states to attract investments and improve development outcomes. Investing in sectors like low-skill manufacturing could help by creating incentives for businesses to relocate to areas with cheaper labor, potentially uplifting poorer regions.
3. A balanced growth strategy is crucial, as developed states already have resources and advantages that allow them to attract more investments, further increasing regional disparities.

Question for practice:

What is the primary challenge with inequality in India.