India’s Income Inequality Status

What is the issue?

In India rich are getting richer, and maybe the poor are becoming less poor, but the gap between the two is widening.

What is the status of income inequality in India?

• India’s income inequality is at its highest level since the Indian Income Tax Act was introduced in 1922.
• The top one percent of income earners are garnering 22 per cent of total income in India, which is the highest ever.
• While the period 1951 to 1980 saw the poor narrowing the income gap with the well-to-do, the trend has reversed over the period 1980-2014.
• The Gini Coefficient for the country is estimated to be close to 0.50, which would be an all-time high.

How income inequality is measured?

• Gini Coefficient is a popular statistical measure to gauge the rich-poor income or wealth divide.
• It measures inequality of a distribution be it of income or wealth within nations or States.
• Its value varies anywhere from zero to 1; zero indicating perfect equality and one indicating the perfect inequality.
• Gini Coefficients can be used to compare income distribution of a country over time as well.
• An increasing trend indicates that income inequality is rising independent of absolute incomes.

What does Gini index of India implies?

• Income Gini for the two years are estimated as 49 and 51, not adjusted by prices, this is an increase of nine Gini points between pre-2004 data and 2011/12.
• India with a six-point Gini increase between 1990-2010, and for Australia, New Zealand, Japan, Taiwan, Hong Kong, and Indonesia, the average increase observed is around 4-5 Gini points.
• In India there is an exceptionable increase in crony billionaires it is associated by an exceptionally large increase in income inequality.
• There is no evidence that income inequality in India increased between 1950 and 2003 the Gini has essentially been constant at around 42.
• India has a large difference in prices of goods across cities and villages, and across rich and poor states.
• Evidence on increasing inequality certainly does not come from trends in consumption inequality.
• India displays a divergence over time, Inter-state inequality has increased between 1960 and 2015.

Source: Indian Express