Income inequality in India
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Income inequality in India refers to the unequal distribution of
wealth Wealth is the abundance of Value (economics), valuable financial assets or property, physical possessions which can be converted into a form that can be used for financial transaction, transactions. This includes the core meaning as held in the ...
and
income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For ...
among its citizens. According to the
CIA World Factbook ''The World Factbook'', also known as the ''CIA World Factbook'', is a reference resource produced by the Central Intelligence Agency (CIA) with almanac-style information about the countries of the world. The official print version is available ...
, the Gini coefficient of
India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
, which is a measure of
income distribution In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes eco ...
inequality, was 35.2 in 2011, ranking 95th out of 157. Wealth distribution is also uneven, with one report estimating that 54% of the country's wealth is controlled by millionaires, the second highest after
Russia Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...
, as of November 2016. The richest 1% of
Indian Indian or Indians may refer to: Peoples South Asia * Indian people, people of Indian nationality, or people who have an Indian ancestor ** Non-resident Indian, a citizen of India who has temporarily emigrated to another country * South Asia ...
s own 58% of wealth, while the richest 10% of Indians own 80% of the wealth. This trend has consistently increased, meaning the rich are getting richer much faster than the poor, widening the income gap. Inequality worsened since the establishment of income tax in 1922, overtaking the British Raj's record of the share of the top 1% in national income, which was 20.7% in 1939–40.


Income gaps

According to
Thomas Piketty Thomas Piketty (; born 7 May 1971) is a French economist who is Professor of Economics at the School for Advanced Studies in the Social Sciences, Associate Chair at the Paris School of Economics and Centennial Professor of Economics in the Int ...
, it is difficult to accurately measure wealth inequality in India because of large gaps in income tax data. Official data from 1997-2000 contained many inconsistencies, while no data was published between 2000-2012. Then, in 2013, official income tax figures showed that only 1% of Indians paid tax that year, while only 2% filed a tax return. This lack of reliable data makes it essentially impossible to make significant, numerical conclusions about income inequality in India. Since much of the population is not represented in income-tax databases, most of the calculations (such as NSSO) are based on consumption-expenditure data instead of income data. According to the World Bank, the Gini coefficient in India was 0.339 in 2009, down from previous values of 0.43 (1995–96) and 0.45 (2004–05). However, in 2016, the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
, in its regional economic outlook for Asia and the Pacific, said that India’s Gini coefficient ''rose'' from 0.45 (1990) to 0.51 (2013). According to the 2015 World Wealth Report, India had 198,000
high-net-worth individuals High-net-worth individual (HNWI) is a term used by some segments of the financial services industry to designate persons whose investible wealth (assets such as stocks and bonds) exceeds a given amount. Typically, these individuals are defined ...
with a combined wealth of $785 billion.


Class divide

''Credit Suisse’s Global Wealth Databook'' for 2014 reports that the bottom 10% of the Indian society owned merely 0.2% of national wealth, while the richest 10% have been getting steadily richer since 2000.


Causes

N. C. Saxena, a member of the
National Advisory Council The National Advisory Council (NAC) of India was a unconstitutional body set up by the first United Progressive Alliance (UPA) government to advise the Prime Minister of India Manmohan Singh. Sonia Gandhi served as its chairperson for much of th ...
, suggested that the widening income disparity can be accounted for by India's badly shaped agricultural and rural safety nets. "Unfortunately, agriculture is in a state of collapse. Per capita food production is going down. Rural infrastructure such as power, road transport facilities are in a poor state," he said. "All the safety net programmes are not working at all, with rural job scheme and public distribution system performing far below their potential. This has added to the suffering of rural India while
market forces In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering ...
are acting in favour of urban India, which is why it is progressing at a faster rate."


Impact

India's economy continues to grow with its GDP rising faster than most nations. But a rise in national GDP is not indicative of income equality in the country. The growing income inequality in India has negatively impacted poor citizens' access to
education Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty. Va ...
and
healthcare Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health profe ...
. Rising income inequality makes it difficult for the poor to climb up the economic ladder and increases their risk of being victims to
poverty trap In economics, a cycle of poverty or poverty trap is caused by self-reinforcing mechanisms that cause poverty, once it exists, to persist unless there is outside intervention. It can persist across generations, and when applied to developing count ...
. People living at the bottom 10% are characterized by low wages; long working hours; lack of basic services such as
first aid First aid is the first and immediate assistance given to any person with either a minor or serious illness or injury, with care provided to preserve life, prevent the condition from worsening, or to promote recovery. It includes initial in ...
,
drinking water Drinking water is water that is used in drink or food preparation; potable water is water that is safe to be used as drinking water. The amount of drinking water required to maintain good health varies, and depends on physical activity level, a ...
and
sanitation Sanitation refers to public health conditions related to clean drinking water and treatment and disposal of human excreta and sewage. Preventing human contact with feces is part of sanitation, as is hand washing with soap. Sanitation systems ...
.


References

{{India topics Income in India Income distribution
India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...