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Analysis of Socio – Economic Inequality in India

24 Jan 2024 Analysis of Socio – Economic Inequality in India

Posted at 12:47h in Daily current-affairs by
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Source – The Hindu and PIB.

General Studies – Development of Indian Economy, Social Justice, Income Inequality, Socio-Economic Inequality.

Why in the News ?


  • Oxfam’s annual inequality report 2022 titled ‘Survival of the Richest’ was presented at the World Economic Forum (WEF) being held in Davos, Switzerland on January 16, 2023.
  • According to this annual inequality report, the richest 1 percent in India own more than 40 percent of India’s total wealth.

Key points of the Report :

  • At present, if wealth tax is imposed once on the entire wealth of the billionaires present in India at the rate of 2 percent, then it will meet the need of Rs 40,423 crore for the nutrition of malnourished people in the country for the next three years. May go .
  • India’s remaining lower and lower middle class population owns only 3 percent of the wealth.
  • By imposing a wealth tax of 5 percent on the ten richest people in India, the amount of money needed to get children back to school could be met with the money collected from the wealth tax of these rich.
  • India’s 21 richest billionaires currently have wealth worth more than 70 crore people of the country.
  • Half of India’s population, i.e. 50%, has only 3% of the country’s total wealth.
  • While the number of billionaires in India was 102 in the year 2020, the number of billionaires in India in the year 2022 will be 166.
  • Fitch has projected India’s GDP growth at 6.9% for the financial year 2023-24.
  • In May 2023, Fitch had estimated India’s growth rate to be 6%.
  • The GDP growth rate in the financial year 2024-25 is estimated to be 6.5%.
  • According to Fitch, investment is likely to remain the main determinant of economic growth.
  • India is a country with a highly unequal economy. India’s household surveys tend to grossly underestimate consumption, income and wealth. COVID-19 has deepened these flaws, exacerbating deeply entrenched income inequalities.
  • If we compare the increase in the wealth of the extremely rich in the present period with the plight of millions of migrant workers forced to return to their villages on foot, the extreme state of economic disparities in the country becomes clearly visible.
  • The latest edition of the World Inequality Report (2022) shows that the entire concentration of income is moving towards the top of the pyramid, i.e. upwards.

Major factors of Socio- Economic inequality in India :

  • In India, it is customary to look at income inequality by focusing on inequalities in consumption, income and wealth.
  • There is also a high level of inequality in India in terms of opportunities to get a job.

Factors present for inequality in opportunities :

  • In India, a person’s birth, caste, house, place of birth, home district and home state, availability of housing in rural or urban areas and daily income and annual income of his parents are all factors that influence his employment. It has a significant impact on prospects and income potential and educational and economic-social status and all these factors determine the class of a person in India.
  • Income – one of the principles of inequalities in the laws of social mobility Children born into low-income/disadvantaged families are less likely to move up the intergenerational income ladder. Due to which the gap of income inequality increases in India.

Key findings of the World Inequality Report 2022 :

  • Across India, the top 10% of the population has earned 57% of India’s national income.
  • India is now one of the top most income-disparate countries in the world.
  • In terms of income inequality in India, the share of women workers in income in India alone is 18%, which is much lower than their average in Asia (21)% except China.
  • India’s elite 1% control 22% of India’s income.
  • The share of the lower class and lower middle class from 50% in India’s total national income has now come down to only 13%. Which shows the class character of income inequality in India.
  • COVID has had a negative long-term impact on the labor market and increased income inequality, which is likely to result in stunted social mobility. COVID has worsened education inequality.
  • Prolonged school closures and the transition to online modes of education have widened the ‘learning’ gap between children from poor and rich families, as confirmed by Impact on Education: ASER 2021. Young children born in poor families and going to school are greatly influenced by technological means of studying and learning like the internet, tablets and smartphones.
  • A significant decline in female labor force participation has been measured in India since the beginning of the COVID 19 pandemic.
  • The unemployment rate in India increased from 7.5% to 8.6% during Covid 19, which meant that there was a huge increase in the number of people who were unable to find jobs among those who were looking for jobs.
  • ‘Casualisation’ or ‘contractualisation’ refers to the reduction of high paying jobs. Therefore, in such a situation, more and more people are being employed as irregular or casual salaried workers.

Solution of the problem / Conclusion :

Developing political awareness and political competence :  Political competence among citizens is considered the first major component of poverty alleviation not only in India but all over the world. People with political competence achieve this by demanding better education and better health care from the state through their payment of taxes. It involves bridging the gap of income inequality and communal divide in any country or society.

Implementing the Nordic Economic Model : The current neo-liberal model, the current redistribution of wealth can be made more equitable by the Nordic Economic Model as this model provides for effective welfare protection, corruption-free governance and quality education and Getting the fundamental right to health care is included. This system involves the state collecting higher taxes from the upper classes or the rich.

Implementing public policies : In view of the increasing inequality even for basic needs in India, public policies should be implemented by the governments to achieve greater and wider spread of health and education among the population.

Wealth Redistribution : World Inequality Report, 2022 suggests paving the way for billionaires to impose an appropriate and progressive wealth tax on their wealth. Which can be a source of huge revenue for the governments.

Ensuring universal access to quality services : Inequality can be reduced to a great extent by ensuring universal access to publicly funded high quality services such as health and education, social security benefits, employment guarantee schemes for any country or society.

Boosting the manufacturing sector : While the service sector can benefit the urban middle class, boosting the manufacturing sector can provide employment in the labour-intensive manufacturing sector to millions of citizens who work in agriculture or farming and that sector. are leaving.

Reducing wage inequalities by setting a minimum wage ceiling : The International Labor Organization (ILO) has recommended that a minimum wage ceiling should be set in a way that balances the needs of workers and their families with macroeconomic factors.

Promoting oppressed and marginalized civil society groups : Providing greater opportunity for expression to traditionally oppressed and oppressed groups, including enabling civil society groups such as unions and associations within these groups. There is a need to widen its reach by motivating Scheduled Castes and Scheduled Tribes to become entrepreneurs and increasing the funding capacity of schemes like Stand Up India.

Removing barriers to women’s full inclusion and eliminating gender inequality : There is a need to remove barriers to women’s full inclusion in the economy. This includes providing access to labor markets, property rights, and targeted credit and investment. In which this problem like income inequality can be solved by encouraging more and more women to become entrepreneurs.

Practice Questions for Preliminary Exam :

Q.1 Consider the following statements in the context of socio-economic disparity and income inequality in India.

  1. According to the Annual Inequality Report 2022, the richest 1 percent of people in India own more than 80 percent of India’s total wealth.
  2. Oxfam’s annual inequality report 2022 titled ‘Survival of the Richest’ was presented at the World Economic Forum (WEF).
  3. Half of India’s population, i.e. 50%, has only 60% of the country’s total wealth.
  4. The latest edition of the World Inequality Report (2022) shows that the overall concentration of income is occurring towards the bottom of the pyramid.

Which of the above statement / statements is correct ?

(A) Only 1, 2 and 3

(B) Only 2, 3 and 4

(C) Only 3

(D) Only 2

Answer –  (D)

Practice Questions for Main Exam :

Q.1. Discuss how the socio-economic inequalities and income disparities prevalent in India can be resolved ? Present a logical explanation to support your answer.

 

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