{"id":323367,"date":"2025-01-14T19:57:02","date_gmt":"2025-01-14T14:27:02","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=323367"},"modified":"2025-01-14T19:57:02","modified_gmt":"2025-01-14T14:27:02","slug":"indias-rising-inequality","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/indias-rising-inequality\/","title":{"rendered":"India\u2019s Rising Inequality\u00a0"},"content":{"rendered":"<p><span data-contrast=\"none\"><strong>Source:<\/strong> This post on India&#8217;s Rising Inequality has been created based on the article \u201cClaims about India\u2019s rising inequality don\u2019t tell the full story\u201d published in The Indian Express on 14th January 2025.\u202f<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:280,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\"><strong>UPSC Syllabus topic:<\/strong> GS Paper 3- Indian Economy<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:280,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\"><strong>Context:<\/strong> The article critically examines the claims of rising income inequality in India, offering a nuanced perspective on the state of economic distribution and inclusivity. It challenges popular narratives about inequality, asserting that Indian growth has been largely inclusive and has contributed to improved living standards across socio-economic strata.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:280,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Why is inclusive growth essential for India?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:280,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"none\">Inclusive growth is crucial for India to achieve the goal of becoming a developed nation by 2047.\u202f<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Key indicators include:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<ul>\n<li><span data-contrast=\"none\">Improving living standards for those at the bottom of the economic pyramid.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Reducing income inequality, as it impacts aggregate demand and resource allocation, which affects economic growth.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">Is income inequality increasing in India?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"none\">No. Survey-based PRICE ICE360 data suggests i<\/span><b><span data-contrast=\"none\">ncome inequality has decreased<\/span><\/b><span data-contrast=\"none\">, and the middle class has expanded in recent years.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Claims about rising inequality often rely on data from the World Inequality Lab (WIL), which has limitations.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"none\">What are the limitations of WIL\u2019s inequality estimates?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"none\">WIL data assumes that 80% of Indian households spend more than they earn, which is implausible. This results in:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Underestimating incomes of low- and middle-income groups.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Overestimating the national income shares of the top 1% and 10%.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Despite its flaws, WIL shows:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<ul>\n<li><span data-contrast=\"none\">The bottom 50% share of national income rose from 13.9% (2017) to 15% (2022).<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">The top 10% share fell from 58.8% to 57.7% in the same period.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">The top 1% share has risen slightly since 2014, by about one percentage point.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:240,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">How do tax policies and administration affect inequality estimates?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"none\">Reductions in marginal tax rates and better tax administration have led to:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Increased reported incomes among top earners.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Marginal tax rates dropped from <\/span><b><span data-contrast=\"none\">93.5% (1970s)<\/span><\/b><span data-contrast=\"none\"> to <\/span><b><span data-contrast=\"none\">39% (now)<\/span><\/b><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"Calibri\" data-listid=\"15\" data-list-defn-props=\"{&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">The top 1%:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<ul>\n<li><span data-contrast=\"none\">Accounts for 17.5% of reported income but pays 42% of total taxes.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">This contribution reduces their post-tax disposable income to 65-75% of headline estimates.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Low-income groups benefit from welfare transfers, which increase their actual income.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">How does GDP growth compare to returns on capital?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><b><span data-contrast=\"none\">Higher GDP growth<\/span><\/b><span data-contrast=\"none\"> relative to returns on capital benefits labour over capital, reducing inequality:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Real rate of return on capital: &lt;2% (average CPI inflation: 5.5%).<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Average GDP growth rate: &gt;6%.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Weighted real lending rates: &lt;4%.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Even though some small- and mid-cap companies outperform, mutual fund investments benefit 14% of Indian families.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"none\">Is inherited wealth the primary determinant of top incomes?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">No. The majority of top earners (60%) are <\/span><b><span data-contrast=\"none\">self-made<\/span><\/b><span data-contrast=\"none\"> and not from the wealthiest families.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><span data-contrast=\"none\">India leads in producing first-generation billionaires, fueled by the booming start-up ecosystem.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">What are the trends in poverty and consumption inequality?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"none\">Extreme poverty has nearly been eradicated since 2011-12.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">NSSO data (2023-24) highlights:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Consumption inequality<\/span><\/b><span data-contrast=\"none\"> has declined.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Improvements in diet quality (increased consumption of milk, meat, fish, fruits).<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Vehicle ownership among the poorest 20% households rose from 6% (2011-12) to 40% (2023).<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559738&quot;:0,&quot;335559739&quot;:240,&quot;335559740&quot;:240,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"none\">Is Indian growth inclusive?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:40,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Yes, on most counts:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"none\">Rising living standards for low-income groups.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Expansion of the middle class.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Declining inequality in consumption and income. While challenges remain, India\u2019s economic and social policies have contributed significantly to inclusive growth.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:240,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Source: This post on India&#8217;s Rising Inequality has been created based on the article \u201cClaims about India\u2019s rising inequality don\u2019t tell the full story\u201d published in The Indian Express on 14th January 2025.\u202f\u00a0 UPSC Syllabus topic: GS Paper 3- Indian Economy\u00a0 Context: The article critically examines the claims of rising income inequality in India, offering&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/indias-rising-inequality\/\">Continue reading <span class=\"screen-reader-text\">India\u2019s Rising Inequality\u00a0<\/span><\/a><\/p>\n","protected":false},"author":10366,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1],"tags":[216],"class_list":["post-323367","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/323367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10366"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=323367"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/323367\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=323367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=323367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=323367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}