The cold truth about India’s income inequality

News: Recent the World Inequality Report has shown that India has very high levels of inequality. It also shows that the gap between the people at the top and bottom of income scale is higher in India than the USA, UK, China.  

Read the detailed findings of the report here.   

What are the causes of this widely present inequality in India?  

Deregulation and liberalisation policies after 1980s have led to an increase in inequality, while the five-year plans which were inspired by the socialist principles reduced the same.  

While the top 1% has majorly profited from economic reforms, growth among low- and middle-income groups has been relatively slow due to which poverty has persisted. 

What has been the trajectory of inequality in India? 

The income of the bottom 50% in India grew at the rate of 2.2% per year between 1951 and 1981, but the growth rate has remained exactly the same over the past 40 years. 

This makes it clear that irrespective of the economic policy, the state of the bottom half of India barely changed. 

This has been caused by the social conditions and constraints in Indian society. 

How can we ensure economic progress? 

Global experience and studies by premier universities has shown that old social structures need to be demolished for economic progress. 

For example: secularisation only predicts future economic development when it is accompanied by a respect and tolerance for individual rights. 

Our neighbourhood is a good example where countries have suffered huge loss due to their support to archaic social structures.  

States like Tamil Nadu ,Kerala , Karnataka which made efforts in breaking the old social structures or adapting them with the needs of today, have seen more mobility and well-being. 

B.R. Ambedkar had issued a grim warning in 1949 that if social and economic inequality persists then for long then political democracy will cease to exist. 

Source: This post is based on the article “The cold truth about India’s income inequality” published in The Hindu on 28^th Dec 2021