Income inequality in India

Poor kids from a razed construction workers' slum look at their well-to-do neighbours in Kondapur.

As of 2015, the income inequality in India is lowest among BRICS nations.

Income gaps

According to the World Bank, the Gini coefficient in India was 0.339 in 2009.

The Gini coefficient in India went up from 0.43 (1995-96) to 0.45 (2004-05).

According to the 2015 World Wealth Report, India had 198,000 high net worth individuals (annual income over $1 million) with a combined wealth of $785 billion.

In 2016, the International Monetary Fund in its regional economic outlook for Asia and Pacific said that India’s Gini coefficient rose to 0.51 in 2013 from 45 in 1990.

Causes

N. C. Saxena, a member of the National Advisory Council, 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 are acting in favour of urban India, which is why it is progressing at a faster rate”.

Impact

The growing income inequality in India has negatively impacted poor citizens' access to education and healthcare. People working in unorganized sectors are the worst sufferers of economic inequality. They are characterized by low wages; long working hours; lack of basic services such as first aid, drinking water and sanitation.

Government actions

The various steps taken by the Indian government to reduce economic inequality include:

Jan Dhan Yojana

A financial inclusion scheme aimed at bringing banking services to the poor.

Labour Reforms

States such as Rajasthan and Maharashtra have attempted to reduce number of rules and regulations for hiring of labour.

Progressive taxation

India has a progressive taxation system, in which the rich are taxed more than the poor.