Strategies to address income inequality

Source: The post strategies to address income inequality has been created, based on the article “Take on the challenge of rising income inequality” published in “The Hindu” on 4th August 2024

UPSC Syllabus Topic: GS paper1 – Poverty and Developmental issues

Context: The article talks about strategies to address income inequality. It suggests progressive taxation, better education, fair labor laws, infrastructure investment, and encouraging the super-rich to contribute. It also highlights local development, decentralization, and the importance of inclusivity and sustainability.

For detailed information on Income and Wealth Inequality in India read this article here

What are the strategies to address income inequality?

1. Progressive Taxation: Implement progressive tax systems where the wealthy pay a higher rate, reallocating resources to fund essential public services that benefit the less privileged.
2. Education and Skill Development: Increase access to quality education and lifelong learning opportunities to enhance employability and income prospects.
3. Fair Labor Laws: Enforce labor laws that guarantee minimum wages, safe working conditions, and rights to collective bargaining to protect workers from exploitation.
4. Investment in Infrastructure: Focus on building infrastructure that supports environmental sustainability and economic inclusivity, reducing regional disparities.
5. Philanthropy of the Super Rich: Encourage the wealthy to donate a portion of their wealth to public causes, inspired by initiatives like the Giving Pledge, which has seen over 235 billionaires pledge $600 billion.

Why is decentralisation important for India?

1. Decentralisation promotes local employment and prosperity by focusing on local needs, talent, and resources.
2. India has 800 districts, each with unique climate, resources, and capabilities, which can develop into 800 production hubs.
3. These districts can use digital platforms for supply chains, logistics, and markets, promoting growth across the country.
4. Banks should prioritize small loans to SMEs, encouraging local innovations and production.
5. Decentralisation aligns with the Gandhian model of development, emphasizing local production and self-sufficiency for a sustainable and inclusive economic future.

How Can Future Jobs Be Created?

1. In an AI-dominated world, jobs will still come from sectors like food, education, health services, tourism, and manufacturing.
2. India’s young talent can meet global workforce demands, but a new economic model focused on decentralisation and inclusivity is needed for sustained growth.

Question for practice:

Examine how decentralization and progressive taxation can help address income inequality in India.