Income Inequality exceeding 1950s
Context:
Despite post-pandemic improvements, India’s income inequality in 2023 remains higher than in the 1950s, as per a paper by the People Research on India’s Consumer Economy (PRICE).
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- The Gini coefficient, a statistical measure of income inequality, stood at 0.410 in 2023, up from 0.371 in 1955.
- During the pandemic in 2021, the Gini coefficient spiked to 0.528, reflecting increased inequality.
Understanding the Gini Coefficient
- The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality).
- A higher value indicates greater income disparity.
- The report highlights entrenched wealth concentration among top earners and persistent struggles among the bottom 10%.
Rural vs. Urban Inequality
- Rural Gini Coefficient: Rose to 0.405 in 2023 from 0.341 in 1955.
- Urban Gini Coefficient: Declined slightly to 0.382 in 2023 from 0.392 in 1955.
Income Share of Bottom Households
- The income share of the bottom 10% of households dropped to 2.38% in 2023 from 3% in 1955.
- However, the share of the bottom 50% rose slightly to 22.82% in 2023 from 22% in 1955.
- Initiatives like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), direct benefit transfers, and financial inclusion programs contributed to a slight rise in income share for the bottom 50%.
 Oxfam reports that income inequality has grown for the first time in 25 years, with over two-thirds (69%) of global wealth concentrated in developed nations. In stark contrast, less than a third is held by developing countries. The top 1% of the global population owns 43% of all financial assets, highlighting the extreme concentration of wealth among the richest individuals. The World Bank indicates that about 700 million people live in extreme poverty, primarily in Sub-Saharan Africa, where 67% of the world’s extreme poor reside. |
Recommendations for Inclusive Growth
- Investments in Key Areas: Education, healthcare, infrastructure, particularly in rural areas.
- Social Safety Nets: Strengthening welfare programs to support vulnerable groups.
- Progressive Taxation: Implementing equitable taxation to reduce income disparities.
This report underscores the need for sustained and inclusive economic strategies to ensure equitable distribution of growth benefits across all sections of society.
