GS Paper III – Inclusive growth and issues arising from it. Context: A study argues that income inequality breeds corruption. According to the UN, The state of not being equal, especially in status, rights and opportunities. |
What is India’s current state of wealth and income inequality?
1) Inequality of income: According to the research, the wealthiest 1% of Indians received 22.6% of the country’s national income in 2022–2023, the highest percentage in the previous century. Moreover, the richest 0.1% in India received about 10% of the country’s total revenue. India has one of the highest national income shares in the world, at 1% of GDP.
2) Wealth inequality: The richest 1% held 40.1% of the nation’s wealth in 2022–2023, the largest percentage since 1961. In the meantime, the share of the richest 10% increased from 45% in 1961 to 65%. This suggests that wealth increased for the rich and decreased for the poor.
3) Comparison to other countries: In contrast to India, Brazil and South Africa have greater levels of wealth disparity.The richest 10% in South Africa and Brazil, respectively, own 79.7% and 85.6% of the country’s wealth.
In contrast, the top 1% of income in India in 2022 accounted for roughly 50% more than in China.
Furthermore, given that income inequality in India is among the highest in the world—it even exceeds that of South Africa, Brazil, and the United States—it could exacerbate wealth inequality.
Measures of Economic Inequality:
a. Gini Coefficient:
Within a country or social group, the Gini coefficient (also known as the Gini index or Gini ratio) is a measure of income, wealth, or consumption inequality. Perfect inequality is denoted by a Gini index of 1, whereas perfect equality is represented by an index of 0.
- Lorenz Curve :
A graphical representation of wealth created by Max Lorenzin in 1906, the Lorenz Curve (the actual distribution of income curve) displays the percentage of money earned by any given fraction of the population. The real distribution of income is depicted by the other line, whereas the equal income distribution is shown by the line at a 45º angle. The size of the income distribution is more unequal the farther it is from the diagonal.
Causes:
- Inflation
- Unemployment
- Tax evasion
- Regressive tax
- Agrarian Strategy
- Education and social indicators
Measures to Deal with Inequalities
Constitutional Provision: Upholding the equality guaranteed by the Constitution as embodied in fundamental rights.
Part of a framework for the Constitutional Right to Equality are Articles 14, 15, and 16.
Article 14 is put into effect by Articles 15 and 16, which are instances of guarantees of equality.
b. Encouraging Civil Society:
- Give historically marginalized and oppressed groups a stronger voice by facilitating the formation of civil society organisations such as unions and associations within these groups.
- Encourage Scheduled castes and Scheduled tribes to start their businesses by increasing funding for programmes like Stand Up India.
- Women Empowerment: This refers to policies that promote gender equality such as affirmative action by reserving seats in legislatures, raising the percentage of reservations at the urban and village levels of local self-government to 50% in all states, strictly enforcing The Equal Remuneration Act, 1976 to eliminate the wage gap, incorporating gender-sensitive curriculum into education, promoting awareness about women’s rights, and altering social norms through initiatives like Beti Bachao Beti Padhao, among others.
- Inclusion of Religious Minorities: Religious minority groups require special consideration, including representation in government positions, institutional credit, improved access to education, bolstering the rule of law, protecting their human rights through the National Commission for Minority, etc.
- Progressive Taxes: By raising the effective tax rate on corporations and imposing progressive taxes on the wealthy, as well as by improving financial transaction monitoring, progressive taxes can provide additional public resources for public services.
- Economic Policies: Inequality can be significantly decreased by guaranteeing that everyone has access to publicly financed, high-quality services like social security payments, public health and education, and employment guarantee programs.
- Job Creation: One of the main causes of the growing disparities in the economy is the inability of manufacturing sectors such as textile, apparel, automotive, and consumer goods to expand.
While the service sector often benefits the urban middle class, labour-intensive industry has the potential to absorb millions of people who are abandoning farming.
Addressing inequality in India is a multifaceted challenge that requires systemic changes across various sectors. Here are some suggestions:
Education Reform
- Universal Access to Quality Education: Ensure that children from all socio-economic backgrounds have access to high-quality education. This includes improving infrastructure, teacher training, and learning materials in rural and underprivileged areas.
- Vocational Training: Provide vocational training programs tailored to the needs of the local economy to enhance employability among marginalized communities.
Healthcare Access
- Affordable Healthcare: Expand the reach of government healthcare programs and improve the quality of services in rural and low-income urban areas.
- Health Awareness Campaigns: Implement widespread health awareness campaigns to educate communities about preventive care and available health services.
Economic Policies
- Inclusive Growth: Promote economic policies that prioritize job creation in rural areas, small towns, and marginalized communities. Encourage small and medium enterprises (SMEs) through subsidies and tax incentives.
- Financial Inclusion: Expand access to banking, credit, and insurance services in underserved regions. Digital financial literacy programs can empower individuals to take advantage of these services.
Social Security
- Strengthen Social Safety Nets: Expand programs like the Public Distribution System (PDS), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), and pensions for the elderly to ensure basic economic security for all.
- Universal Basic Income (UBI): Explore the feasibility of implementing UBI to provide a minimum level of income to all citizens, reducing poverty and income inequality.
Gender Equality
- Empower Women: Strengthen laws against gender discrimination, ensure equal pay, and promote women’s participation in the workforce. Support for women entrepreneurs through grants and mentoring can also be beneficial.
- Education and Awareness: Promote gender equality through education and awareness campaigns, challenging traditional norms that perpetuate gender inequality.
Land Reforms
- Land Redistribution: Implement land reform policies that distribute land more equitably among the poor and marginalized communities.
- Land Rights: Strengthen the legal framework to protect the land rights of indigenous people and marginalized farmers.
Political and Electoral Reform
- Representation: Ensure proportional representation of marginalized communities in political institutions. Reserved seats for women, Scheduled Castes (SC), and Scheduled Tribes (ST) in local bodies should be enforced.
- Campaign Finance Reform: Limit the influence of money in politics to ensure that elected representatives truly represent the interests of all citizens.
Legal Reforms
- Strengthen Anti-Discrimination Laws: Enforce and expand laws that protect against caste, gender, and religious discrimination.
- Legal Aid: Improve access to legal aid for marginalized communities to ensure they can seek justice and protect their rights.
Urban Planning
- Affordable Housing: Develop affordable housing projects for low-income groups in urban areas. Slum rehabilitation programs should focus on providing safe and sanitary living conditions.
- Public Services: Improve access to clean water, sanitation, and electricity in underserved urban areas.
Environmental Justice
- Sustainable Development: Ensure that development projects do not disproportionately affect marginalized communities. Prioritize environmental policies that protect vulnerable populations from the adverse effects of climate change.
Conclusion :
Implementing these measures requires coordinated efforts from government, civil society, and the private sector. It’s important to address both the symptoms and the root causes of inequality to create a more equitable society.
Explore our courses: https://apnipathshala.com/courses/
Explore Our test Series: https://tests.apnipathshala.com/
