Inequality of Income in India


At an all-time high, income inequality is continuing to rise.

Our society's frail fabric is rupturing due to rising inequality and unemployment.


  • According to the poll, 1% of the world's population received 82% of the money created last year, while the 3.7 billion individuals who make up the poorest half of the population did not see a rise in wealth. Also, since 2010, billionaires' wealth has grown by an average of 13% annually, which is six times faster than the average annual salary growth for all workers, which is only 2%.
  • According to a recent study by the international rights organization Oxfam, the richest 1% of Indians accumulated 73% of the nation's total wealth in 2017.
  • According to the same survey, the 67 crore Indians who make up the population's lowest half witnessed a 1% increase in wealth in 2017.
  • According to the Global Inequality Lab Report 2020, income inequality significantly increased in China and India following economic liberalization in the 1980s.
  • In China, the top 10% share increased from 28% in 1980 to 41% in 2019, while the top 10% share in India increased from 30% in the 1980s to over 56% in 2019.
  • This is a bigger issue in India because of the pervasiveness of the caste system and the regional disparities.
  • Only 22.3% of upper caste Hindus comprise the country's richest group and hold 41% of its overall wealth, according to a study co-conducted by a few Indian colleges, while 7.8% of Hindu Scheduled Tribes in the lowest part of the nation's assets at 3.7%.
  • A further study found that five states—Maharashtra, Uttar Pradesh, Kerala, Tamil Nadu, and Haryana—owned around 50% of the nation's overall wealth.

Causes of Income Inequality:

  • The rise in income equality in India has a number of causes, some of which are as follows:
  • The emergence of a rentier class that aims to maximize its leverage over fixed assets like land and property in order to maximize income
  • The Reserve Bank's 2019 analysis revealing that home affordability has drastically declined over the last four years makes it understandable why millennials now choose to rent rather than shoulder the rising cost of high EMIs.
  • The low productivity of labour, which can trap many people in poverty, is also largely caused by unemployment. It is a known reality that unemployment, poverty, and inequality are all interconnected. There is a current income disparity between classes since more jobs need to be established on time.
  • Less profit is made during an inflationary period, and wage earners are the ones who suffer the losses. While revenues are increasing, wages have mostly stayed the same. Moreover, while money income increases, real income declines, lowering the overall standard of living.
  • High tax rates cause inequality in the distribution of income and wealth. This is due to excessive income concentration in a small number of hands brought on by widespread tax evasion.

The effects of income inequality include:

  • The equitable distribution of wealth and the principles of equality of status and opportunity conflict with this.
  • Regional inequities will seriously threaten cooperative federalism.
  • The government must encourage inclusive growth by supporting policies like land reform, social security pensions, scholarships, and skill-training programmes for vulnerable areas.
  • It must also look into enacting an inheritance tax on the very wealthy.
  • Additionally, it is essential to support private sector investment by enhancing the business climate, preventing tax terrorism, and advancing pro-business legislation.
  • According to Oxfam, the main drivers of economic inequality are the erosion of workers' rights, excessive large company influence over governmental legislation, and the unrelenting corporate drive to maximize profits for shareholders by minimizing costs.

Future Perspectives:

  • Government must make sure that these reasons are addressed in its policies and that a free and fair market is established.
  • Government attention must also be paid to the quality of public services like health and education, which is a significant leveller.
  • To address state disparities and promote cooperative federalism in its true form, the Central government and NITI Aayog should develop policies.
  • The only way to address the issue of income inequality in India is through a comprehensive strategy to encourage inclusive growth.

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