Inequality in India
The elimination of poverty and inequality are at the core of all the development objectives. Development requires a higher GNP and a faster growth. The basic issue is not only how to make GNP grow but also who would make it grow, the few or the many. If it were the rich, it wold be appropriated by them, and poverty and inequality would continue to worsen. But if it were generated by the many they would be its principal benefiters.
Although our main focus is on economic poverty and inequalities in the distribution of incomes and assets, it is important to keep in mind that this is only a small part of the broader inequality problem in the developing world. Off parallel or even greater importance are inequalities of power, prestige, status, gender, job satisfaction, conditions of work, degree of participation, freedom of choice, access to services and amenities and many other dimensions of the problem that relate more to self esteem and freedom to choose. But we cannot 5really separate the economic from the non economic manifestations of inequality. Each reinforces the other in a complex and often interrelated process of causes and effect.
Economic inequality is the fundamental disparity that permits one individual certain material choices, while denying another individual the very same choices. There are two reasons to be interested in the inequality of income and wealth distribution. First there are philosophical and ethical grounds for aversion to inequality per se. Second, inequality will be important not for its own sake, but because it has an impact on other economic variables. Suppose you care about overall growth, but find that inequality in income and wealth somehow reduce the possibilities of overall growth. This is the fictional impact of inequality.
In India there is no official organization to compile data on income distribution. However, the National Council of Applied Economic Research (NCAER) and some individual researchers have examined the pattern of income distribution in India at different points of time.
Income inequality during the first three decades of the planning period
During the 50s
The broad picture that emerged from the income inequality estimates of Lydall, Lyengar, Mukherjee, the RBI and the NCAER is that the top 10% of the households received around 30% of income. These estimates susses that the bottom 205 of the people received about 85 to 9% of income. The distribution of personal income in the urban sector was more unequal than in the rural sector.
During 60s
Almost all the estimates were strikingly similar and suggested that the bottom 20% of the population had a share of 7.5% of the total income and the top 20% had a share of about 47% and the Lorenz ratio was between .35 and .39.The estimated average income of the topmost docile was about 18 times that of the lowest decline in urban sector, while for the rural sector it was about 10 times.
During 70s
The World Bank and the ILO estimates in 1975-76 showed that the lowest 20% households (rural and urban companied) accounted for 7% of the household while the highest 20% accounted for 49.4%.
During 80s
In 1983 the top 20% of the households had accounted for 41.4% of the expenditure remained almost the expenditure same. However the share of the lowest 20% of the households rose from 8.1% in 1983 to 8.8% in 1989-90.
Reform Period
This was a period of increase in inequality. According for the consumer household expenditure estimates, between1989-90 and 1994 there seems to be some improvement in the household expenditure. The share of the richest 20% population rose from 39.3% in 1994 to 45.5% in 2004-05 while the share of the bottom 20% declines from 9.2% to 8.1%.
Causes of Income Inequality
Ø Inequality in land ownership and concentration of a tangible wealth in the rural sector.
On account of the Zamindari system there was concentration of landed property in India. In 2000-01 62.3% of total operational holdings were marginal holdings (less than one hector in size0 but area operated under them was just 18.7%. This implies a very high concentration of landed property in the hands of few peoples resulting in an increase in inequality.
Ø Concentration of assets in the private corporate sector. There is an extreme concentration of economic power and wealth in the hands of the large industrialists and that they have succeeded in acquiring massive assets over time. During the reform period too this trend continued. In 2008 the largest private sector company, Reliance industries alone had assets worth RS 1, 74,544 Core.
Ø Inequalities in professional education and training. There is a strong bias in education and training in favour of elite’s class. This result in further inequality in earnings and thus the initial inequality is perpetuated and widened.
Ø Inflation. In India we experiences long period of inflation. This economic malady too favours the rich and taxes the poor. This is another reason for inequality.
Ø Inequality in credit facilities. Access to credit is quite limited fir the poor. But the rich better placed in this regard.
Ø The urban Bias in Investment. Most of the invest able resources are flowing to the urban area contributing to less employment generation and high inequality.
Ø The Role of the Government. In a no-liberal administration mechanism the role of the government is limited and the policies favor the rich. This is norther significant factor which supplement the existing inequity.
Measures to reduce Inequality
· Land reforms and redistribution of agricultural land
· Control of monopolies
· Employment and wage policies
· Special security measures
· Minimum needs programme
· Special programme for the poor.
· Progressive taxation
In spite of the conscious effort on the part of the government the problems of poverty and inequality are increase day by day. Therefore it is high time to effect some radical change in our strategies of poverty amelioration and reduction of inequality
