Editorial: Unequal Republic

Despite a surfeit of welfare models being experimented across the world, the gulf between the rich and the poor has been widening. The pandemic has made the world more unequal, with wealth distribution becoming more skewed than ever before. In the case of India, the inequality is all the more stark. The latest ‘State of […]

Despite a surfeit of welfare models being experimented across the world, the gulf between the rich and the poor has been widening. The pandemic has made the world more unequal, with wealth distribution becoming more skewed than ever before. In the case of India, the inequality is all the more stark. The latest ‘State of Inequality in India Report’, compiled by the Economic Advisory Council to the Prime Minister, concedes that while earnings have risen over the years, the benefits of that growth have largely remained concentrated and this has marginalised the poor further. India’s income profile is outlined by a growing disparity between those who lie on the top end of the earning pyramid and those on the bottom, highlighting the failure of the trickle-down approach to economic growth. The relationship between economic growth, poverty and inequality is complex, and the forces that influence it in richer countries may not be at play in India. Economic growth has lifted more than 250 million Indians out of poverty in a relatively short time but, paradoxically, the socio-economic disparities have increased. Though progress has been made in various indicators — from improved labour participation, health infrastructure and enrolment ratio of students to child mortality — wealth concentration has worsened. Those earning a mere Rs 25,000 per month are in the 10% of income earners in the country. Given this ground reality, a comprehensive urban job scheme and universal basic income (UBI) could be the answers to reduce inequality in the country.

However, a key implementation challenge is that the UBI runs the risk of becoming an add-on to, rather than a replacement of, the current anti-poverty programmes. The report further highlighted that the average monthly salary of regular salaried, wage earners in July-September 2019 amounted to Rs 13,912 for rural males and Rs 19,194 for urban males. The growth rate of the bottom 50% has been at 3.9% from 2017-18 to 2019-20, while the top 10% has grown by 8.1%. This highlights the disparity between the income groups and the disproportionate rate of growth among these tiers. Additionally, the top 1% grew almost 15% between 2017-18 and 2019-20, whereas the bottom 10% registered a close to 1% fall. Inequality in both income and wealth has increased in India in recent years. According to the World Inequality Report, the richest 10% of Indians account for 57.1% of all income, compared with only 13.2% for the poorest half. And wealth inequality is more pronounced. The poorest half of the Indian population possesses just 5.9% of the country’s total wealth, whereas the richest 10% controls 64.7%. The International Monetary Fund predicted 24% growth for the Indian economy during 2021 to 2023, which one hopes will help in reducing both poverty and inequality.

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