Context:
A new working paper, titled “Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj”, by World Inequality Lab has estimated that “inequality declined post independence till the early 1980s, after which it began rising and has skyrocketed since the early 2000s”.
1. Enlist a few scholars' approach on inequality in India?
| Thomas Piketty |
- Thomas Piketty calls the tendency for inequality to rise during periods when the rate of return on capital is higher than the economy's rate of growth “the central contradiction of capitalism”.
- Thomas Piketty specializes in economic inequality, taking a historic and statistical approach.
- His work looks at the rate of capital accumulation in relation to economic growth over a two hundred year spread from the nineteenth century to the present.
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| Amartya Sen |
- Inequality Reexamined is a 1992 book by the economist Amartya Sen.
- In the book Sen evaluates the different perspectives of the general notion of inequality, focusing mainly on his well-known capability approach.
- According to Amartya Sen, inequalities related to class, gender, and communities hinder the extent of human freedom and thus decrease our ability to function.
- That is why a good society ought to mitigate such discrimination, promoting people's freedom which is the most valuable element of a satisfactory life.
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| Abhijit Banerjee and Esther Duflo |
- The Nobel laureate economists, Abhijit Banerjee and Esther Duflo said that India is now among the most unequal countries in the world.
- The gap between the top 1% and the bottom 50% is wider for India than the United States, the United Kingdom, China, Russia and France.
- They emphasized the need for a pedagogy that encourages curiosity and independent thinking over rote learning.
- They have pioneered the use of experimental methods to assess the effectiveness of various anti- poverty interventions, such as education programs, healthcare initiatives, and small-scale economic policies.
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2. What is the status of inequality in India?
| Indicators |
Description |
| Extreme levels of inequality in India |
- As per World Inequality Lab, In 2022-23, India’s top 1% own 22.6% of India’s national income and 40.1% of the country’s wealth.
- This is higher than even during the inter-war colonial period.
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| Emergence of very high net worth individuals |
- The period between 1990 to 2022 witnessed a rise in national wealth and the emergence of very high net worth individuals.
- The number of high net worth individuals has increased from 1 to 52 to 162 in 1991, 2011 and 2022 respectively.
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| Extreme wealth concentration at the very top |
- Between 1961 and 2023, the top 1% wealth share has increased threefold, from 13% to 39%.
- Most of these gains came post-1991 after which point top 1% shares have been on a steep upward trend right until 2022-23.
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| The State of Food Security and Nutrition in the World, 2023 |
- Around 74% of India’s population could not afford a healthy diet, and 39% fell short of a nutrient- adequate one.
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| According to Global Hunger Index 2023 |
- India’s 2023 GHI score is 28.7, considered serious according to the GHI Severity of Hunger Scale.
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3. What is the status of inequality in the world?
As per the working paper by World Inequality Lab which titled ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj-
- India’s top 1% income share and wealth share is among the very highest in the world, behind only perhaps Peru, Yemen and a couple of other small countries.
- India has one of the highest wealth and income inequality in the world.
| Dimension |
Description |
| Wealth Inequality |
- India is one of the most unequal countries in the world, with the top 10% of the population holding 77% of the total national wealth.
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| Income Inequality |
- According to the World Inequality Report 2022, India is among the most unequal countries in the world, with the top 10% and top 1% of the population holding 57% and 22% of the total national income respectively.
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4. What is the Landscape of Inequality in India?
5. What are the factors responsible for rising inequality in India?
| Factors |
Analysis |
| Lack of Access to Resources |
- Land, a critical resource in agrarian economies like India, is often concentrated in the hands of a few, perpetuating economic disparities.
- Land reform policies have faced challenges in implementation, hindering the distribution of land to marginalized communities.
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| Disparities in Education |
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| Discrimination in the Workplace: |
- Workplace discrimination based on caste, gender, and religion remains a significant hurdle.
- Affirmative action policies, while commendable in intent, face resistance and implementation challenges, preventing marginalized groups from enjoying equal opportunities in employment.
 |
| High level of in- formalization of economy |
- In terms of employment share the unorganized sector employs 83% of the work force and 17% in the organized sector.
- There are 92.4% informal workers (with no written contract, paid leave and other benefits) in the economy.
- There are also 9.8% informal workers in the organized sectors indicating the level of outsourcing.
 |
| Jobless growth in India |
- India experienced job growth of 3% p.a in the 70s at a time when our economy grew at 3- 3.5% p.a but over the last 3 decades our economy grew at over 5-8% p.a but our job growth has been close to 1% p.a.
 |
| Regional Disparities |
- The uneven distribution of resources and opportunities between urban and rural areas further deepens the inequalities.
- States like Bihar and Jharkhand face higher levels of poverty and limited access to essential services compared to more prosperous regions.
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| Digital inequality |
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| Social Exclusion |
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| Demonetization Impact |
- In 2016, the Indian government implemented a bold policy of demonetization, withdrawing high-denomination currency notes to curb black money and corruption.
- While the intention was to promote financial transparency, the impact on various segments of the population, especially those in the informal sector, raised concerns about its efficacy in addressing inequality.
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| Effectiveness of Social Welfare Programs |
- While India has implemented various social welfare programs to address inequality, their effectiveness is often marred by bureaucratic inefficiencies, corruption, and inadequate reach.
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6. What are the challenges of rising inequality in India?
| Challenges |
Implications |
| Poor healthcare |
 |
| Rising school dropouts. |
- According to data from the Ministry of Education, in the 2021-22 academic year, seven states, including Bihar, Uttar Pradesh, and Gujarat, had secondary-level school dropout rates exceeding the national average of 12.6%.
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| Vicious cycle of poverty |
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| Migration |
- As per the Report Migration in India, 2020-21, based on Periodic Labour Force Survey (PLFS) 2020-21, released by Ministry of Statistics and Programme Implementation (MoSPI), the total migration rate in India was 28.9% and in rural was 26.5%.
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| High Crime Rates |
- Inequitable distribution of wealth leads to lower social trust and higher crime rates.
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| Rising subsidies burden |
- As per World Bank subsidy in the agriculture, fishing, and fossil fuel sectors exceeded USD 7 trillion, equivalent to 8% of the global gross domestic product.
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| Social Unrest |
- In the recent annual World Employment and Social Outlook report, ILO has held that :
- As many as 267 million young people between the ages of 15 and 24 are not employed, educated or trained which is contributing to the social unrest caused across the globe.
- The report draws a very strong connection between social unrest, unemployment and underemployment.
- As per a given report 10% increase in inequality measures increases by 6.5% the unconditional probability of observing social unrest in a village in a given month.
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7. What steps have been taken by the government to reduce inequality in India?
| Initiatives |
Analysis |
| Affirmative Action |
- Reservation policies in education and employment have been instrumental in providing opportunities to historically marginalized communities.
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| Pradhan Mantri Awas Yojana (PMAY) |
- Pradhan Mantri Awas Yojana is a credit-linked subsidy scheme by the Government of India to facilitate access to affordable housing for the low and moderate-income residents of the country.
- It is one of the largest affordable housing programmes in the world.
- So far, a total of 60 lakh houses are in various stages of construction and nearly 32 lakh houses have been complet.
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| Pradhan Mantri Jan Dhan Yojana (PMJDY) |
- PMJDY brings about the objective of financial inclusion for all by providing basic banking accounts with a debit card with inbuilt accident insurance.
- The main features of PMJDY include Rs. 5,000 overdraft facility for Aadhar-linked accounts and a RuPay debit card with inbuilt Rs. 1 lakh accident insurance cover.
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| Mahatma Gandhi National Rural Employment Guarantee Act Scheme (MGNREGA) |
- Mahatma Gandhi National Rural Employment Guarantee Act 2005 or MGNREGA, earlier known as the National Rural Employment Guarantee Act or NREGA, is an Indian social welfare measure that aims to guarantee the 'right to work'.
- It provides social protection for the most vulnerable people living in rural India by guaranteeing wage employment opportunities.
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| Samagra Shiksha Abhiyan |
- It is an Integrated Scheme for School Education.
- This programme subsumes the three erstwhile Centrally Sponsored Schemes of Sarva Shiksha Abhiyan (SSA), Rashtriya Madhyamik Shiksha Abhiyan (RMSA) and Teacher Education (TE).
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| Ayushman Bharat |
- Ayushman Bharat is also known as Pradhan Mantri Jan Arogya Yojana (PM-JAY).
- It provides insurance coverage of up to ₹5 lakh per family per year for hospitalization and medical treatments, targeting over 50 crore beneficiaries.
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| Deendayal Antyodaya Yojana- National Urban Livelihoods Mission (DAY- NULM) |
- NULM replaced the existing Swarna Jayanti Shahari Rozgar Yojana (SJSRY) and is known as Rashtriya Shahari Ajivika Mission in Hindi.
- It focuses on organizing urban poor in their strong grassroots level institutions by enhancing sustainable livelihood opportunities through skill development.
- It aims at leading poor to market-based employment and helping them to set up self- employment ventures by ensuring easy access to credit.
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8. What is the Supreme Court’s take on Inequality in India?
In D.S. Nakara v. Union of India (1983), the Supreme Court held that the primary objective of a socialist state is to eradicate inequality in income, status, and the standard of living.
9. What should be the way ahead?
1. Education Reforms:
- Investing in quality education and addressing disparities in access can empower future generations, breaking the cycle of poverty and contributing to a more skilled and competitive workforce.
2. Enhanced Social Protection:
- Strengthening social protection programs, including healthcare and social security, can provide a safety net for vulnerable populations, reducing the impact of economic shocks.
3. Need for Inclusive Policy Design:
- The experience with GST underscored the importance of designing policies that consider the diverse nature of India’s economy, with a focus on supporting small businesses and informal sectors.
4. Need for Inclusive Policy Design:
- Leveraging technology for inclusive growth and innovation can bridge gaps in access to information, education, and financial services.
- Digital platforms and innovations in agriculture, healthcare, and education have the potential to uplift marginalized communities.
5. Importance of Sustainable Development Goals (SDGs):
- Aligning efforts with the broader SDGs is essential for comprehensive and sustainable development.
- Reduced inequality is not only a goal in itself (SDG 10) but also a catalyst for achieving other goals related to poverty eradication, health, and education.
10. What are some best practices adopted to reduce inequality in India?
Kerala’s Development Model
- Kerala, often hailed for its unique development trajectory, has stood out as a beacon of success in reducing inequality.
- The state’s journey began in the mid-20th century, marked by visionary leadership and a commitment to social justice.
- Land reforms initiated in the 1950s aimed to address the historical concentration of land among a few elite families, thereby empowering marginalized communities.
- The focus on education and healthcare, driven by the ‘Kerala Model,’ further set the stage for inclusive development.
Achievements:
- Human Development Indicators: Kerala consistently boasts impressive human development indicators, with high literacy rates, life expectancy, and low infant mortality rates.
- Social Welfare Programs: The state’s commitment to social welfare programs, including the expansion of healthcare facilities and educational institutions, has created a more egalitarian society.
- Empowerment of Marginalized Communities: Through affirmative action policies, Kerala has empowered historically marginalized communities, ensuring their participation in the socio-economic fabric of the state.
Self-Help Groups in Rajasthan
- Rajasthan, a state with a diverse cultural heritage, faced challenges related to economic disparities and gender inequality.
- The introduction of self-help groups (SHGs) in the late 20th century aimed to address these issues by promoting economic self- sufficiency among women in rural areas.
- The initiative gained momentum as a grassroots movement, empowering women and fostering community development.
Achievements:
- Economic Empowerment: SHGs in Rajasthan have been instrumental in providing women with the means to generate income, breaking the cycle of poverty and dependency.
- Social Cohesion: Women involved in SHGs often acquire new skills, enabling them to diversify their economic activities and contribute meaningfully to the household and community.
- Skill Development: Women involved in SHGs often acquire new skills, enabling them to diversify their economic activities and contribute meaningfully to the household and community.
11. What is the relevance of the topic for UPSC CSE?
- For Prelims: WEF, GDP, GST, Growth, GHI score, Global Gender Gap Report, OECD, Mahatma Gandhi National Rural Employment Guarantee Act Scheme (MGNREGA), National Rural Health Mission (NRHM), Pradhan Mantri Jan Dhan Yojana
- For Mains: Recent Economic Growth Trajectory of India, Inequality Trends in India, Increasing Inequality in India, Inclusive Growth, Steps to Achieve Inclusive Growth in India.
Some previous years prelims questions.
Q1. Inclusive growth as enunciated in the Eleventh Five Year Plan does not include one of the following: (2010)
(a) Reduction of poverty
(b) Extension of employment opportunities
(c) Strengthening of capital market
(d) Reduction of gender inequality
Ans: (c)
Some previous years mains questions.
Q1. COVID-19 pandemic accelerated class inequalities and poverty in India. Comment. (2020)
Some questions from this year and previous years interview transcripts.
Board Sanjay Verma sir (2024)
- What are the types of inequalities in India?
- Reason for north south inequalities (based on previous answer...corrected me by saying it is more kind of discrimination)
- How to bridge the gap of regional inequality?
- How do you see these inequalities in the coming 20 years?
Board Dinesh Dasa sir (2024):
- Do you think inequalities exist in India? If yes, why. If not, why?
Board Sheel Vardhan sir (2024):
- What is the worst form of inequality in the country?
Board Raj Shukla sir (2024):
- What is Spoofing and Cloud Computing?
- Since you are a mathematical person you must be very familiar with equality, then tell me how does A.I. impact equality?
- Then AI is a bad technology since it increases inequality. What are your views about it?
Some questions for QUIZ.
Q1. World Inequality Report is published by which of the following organizations.
(a) World Bank
(b) IMF
(c) World Economic Forum
(d) World Inequality Lab
Ans: (d)
Some questions for POLL.
Q1. Do you think inequalities exist in India?
(a) YES
(b) NO
(c) Can’t say.
Q2. Does inequality have increased in the post Covid era?
(a) YES
(b) NO
(c) Can’t say.
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