{"id":51147,"date":"2019-08-12T19:00:10","date_gmt":"2019-08-12T13:30:10","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?p=51147"},"modified":"2019-08-12T16:28:09","modified_gmt":"2019-08-12T10:58:09","slug":"7-pm-indias-economic-mobility-and-its-impact-on-inequality-12th-august-2019","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-indias-economic-mobility-and-its-impact-on-inequality-12th-august-2019\/","title":{"rendered":"7 PM | India\u2019s economic mobility and its impact on inequality | 12th August, 2019"},"content":{"rendered":"\n<p><strong>Context:<\/strong> Rising\ninequality due to reduced economic mobility <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>&#8216;Income-mobility&#8217;\nanalysis involves following the same people for two or more points in time and\nstudying the changes in their economic well-being.<\/li><li>Economic\nwell-being may be measured by income, consumption, or labor earnings, among\nothers. The recipient units may be households, per capita, adult equivalents,\nor individual earners.<\/li><\/ul>\n\n\n\n<p><strong>More\nin News:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>A 2018 Oxfam study\nreports a significant increase in the consumption Gini index (a statistical\nmeasure of inequality) in both rural and urban areas from 1993-94 to 2011-12.<\/li><li>According to the&nbsp;<em>Global Wealth Report (GWR)\n2017<\/em><em>,<\/em> put out by the\nCredit Suisse Research Institute, between 2002 and 2012, the share of the\nbottom 50% of the population in total wealth declined from 8.1% to only 4.2%.<\/li><\/ul>\n\n\n\n<p><strong>Reasons behind rising\ninequality:<\/strong><strong><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Growth rate:<\/strong> While the growth\nrate of Indian economy has been slow for most years since Independence, but at\nthe same time increase in population is exponential<\/li><li><strong>Economic reforms: <\/strong>The acceleration\nin growth rate in the 1980s was accompanied by declining or stagnant\ninequality; the period after 2004-05 has seen a rapid rise in inequality. <\/li><li>In\nfact, the period of rising inequality coincides with the beginning of economic\nreforms in 1991. Economic reforms focused only on some sectors like services\n(software) and financial sectors, where rural and illiterate people are out of\nreforms<\/li><li><strong>High debts:<\/strong> NSSO conducts All\nIndia Debt and Investment Survey (AIDIS) once in a decade, and the AIDIS data\nprovides stark evidence of extremely high levels of wealth inequality and\nfurther worsening trends.<\/li><li><strong>Inflation:<\/strong> Another cause of\ninequality is inflation. During inflation, few profit earners gain and most\nwage earners lose. This is exactly what has happened in India. Since wages have\nlagged behind prices, profits have increased. This has cre\u00adated more and more\ninequality.<\/li><li><strong>Tax evasion:<\/strong> In India, the personal in\u00adcome tax\nrates are very high. High tax rates en\u00adcourage evasion and avoidance and give\nbirth to a parallel economy. This is exactly what has hap\u00adpened in India during\nthe plan period. <\/li><li>Here, the unofficial\neconomy is as strong as (if not stronger than) the official economy. High tax\nrates are re\u00adsponsible for inequality in the distribution of in\u00adcome and\nwealth. This is due to undue concentra\u00adtion of incomes in a few hands caused by\nlarge- scale tax evasion.<\/li><li><strong>Agriculture:<\/strong> No doubt, India\u2019s\nnew agricultural strategy led to the Green Revolution and raised agricultural\nproductivity. But the benefits of higher productivity were en\u00adjoyed mainly by\nthe rich farmers and landowners. <\/li><li>But the economic\nconditions of lan\u00addless workers and marginal farmers deteriorated over the\nyears. Most farmers in India could not enjoy the-benefits of higher\nagricultural produc\u00adtivity. As a result, inequality in the distribution of\nincome in the rural areas has increased.<\/li><li><strong>Discrimination\nacross Social Groups:<\/strong>\nAccording to a study based on the NSSO data for 2004\u201005, while chances of\nsecuring a regular job were 21.5 per cent in the case of caste Hindus, they\nwere only 6.7 per cent in the case of Scheduled Tribe and 12.4 per cent in the\ncase of those belonging to Scheduled Castes.<\/li><\/ul>\n\n\n\n<p><strong>Measures to increase in\neconomic mobility and reducing inequality:<\/strong><strong><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Agriculture:<\/strong> land reforms and\nalong with that increase in the viability of small and marginal farmers will\ndecrease the inequality in rural areas and increase the productivity in\nagriculture<\/li><li><strong>Social protection:<\/strong> The recent theory\nand evidence \u201coffers a new perspective on social protection policies in poor\ncountries, suggesting that there is a scope for using these policies to\ncompensate for the market failures that perpetuate poverty, particularly in\nhigh-inequality settings, so government should focus more on social welfare\nmeasures.<\/li><li><strong>Employment and\nskills:<\/strong>\nfor increasing workforce, future employment has to be created in manufacturing\nand services. In this context, the Make in India initiative, focus on\nstart-ups, Mudra, financial inclusion, etc., are steps in the right direction.<\/li><li><strong>Labor\ninequalities:<\/strong>\nMost of the inequalities (economic and social) will have labor market\ndimension. Some issues on inequality exclusively deal with labor market\nstructures, processes, and mechanisms. So the government should pass the\ncodified labor laws as soon as possible.<\/li><li><strong>Pro employment\nMacroeconomic policies:<\/strong> Appropriate macro policies such as trade, fiscal and\nmonetary policies should promote employment by providing appropriate policies\nand institutions.<\/li><li>Monetary\nstimulus in advanced countries helped preventing worse outcomes. In response to\nthe global crisis developed countries reduced short term lending rates. These\nmeasures prevented a larger fall in employment.<\/li><li><strong>Education and\nAffirmative Policies:<\/strong>\nThere has been social exclusion and discrimination of some social groups in\nlabor market. There is a need for two types of policies. First one is education\nand skill improvement for the disadvantaged sections. Education is the key\ndeterminant of employment prospects.<\/li><li>There\nis a strong link between educational attainment and employment outcomes, and\npeople with higher levels of education enjoy a competitive advantage in the\nlabor market, including higher wage levels. Education for these groups would\nreduce the gap with other groups. Second one is affirmative action in\neducation.<\/li><\/ul>\n\n\n\n<p><strong>Way\nforward: <\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Rising inequalities is a concern in many advanced and developing countries of the world. Inclusive approach is needed for several reasons. In the context of ethics and humanism, equality is important for its own sake. Inequality reduction is also required for sustainability of growth.<\/li><li>If we reduce personal, social, gender, rural-urban and regional disparities, both the objectives of ethics and growth of equality will be achieved. Lower inequalities would result in higher demand from bottom deciles, vulnerable and disadvantaged sections and lead to higher growth. <\/li><li>If we define equity in terms of empowerment and increase in participation of the poor, there is no trade-off between growth and equity. Reduction in corruption can help in improvement of equality.<\/li><\/ul>\n\n\n\n<p>Source: <a href=\"https:\/\/www.livemint.com\/opinion\/columns\/india-s-economic-mobility-and-its-impact-on-inequality-1565547531046.html\">https:\/\/www.livemint.com\/opinion\/columns\/india-s-economic-mobility-and-its-impact-on-inequality-1565547531046.html<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: Rising inequality due to reduced economic mobility &#8216;Income-mobility&#8217; analysis involves following the same people for two or more points in time and studying the changes in their economic well-being. Economic well-being may be measured by income, consumption, or labor earnings, among others. The recipient units may be households, per capita, adult equivalents, or individual&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/7-pm-indias-economic-mobility-and-its-impact-on-inequality-12th-august-2019\/\">Continue reading <span class=\"screen-reader-text\">7 PM | India\u2019s economic mobility and its impact on inequality | 12th August, 2019<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130,9],"tags":[],"class_list":["post-51147","post","type-post","status-publish","format-standard","hentry","category-7-pm","category-public","entry"],"jetpack_featured_media_url":"","views":{"total":85,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/51147","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\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=51147"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/51147\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=51147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=51147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=51147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}