Inequality In India
According to a report by the Johannesburg-based company New World Wealth, India is the second-most unequal country globally, with millionaires controlling 54% of its wealth. With a total individual wealth of $5,600 billion, it’s among the 10 richest countries in the world – and yet the average Indian is relatively poor.
Compare this with Japan, the most equal country in the world, where according to the report millionaires control only 22% of total wealth.
In India, the richest 1% own 53% of the country’s wealth, according to the latest data from Credit Suisse. The richest 5% own 68.6%, while the top 10% have 76.3%. At the other end of the pyramid, the poorer half jostles for a mere 4.1% of national wealth. (Image below for representation)
Inequality on any front within a country lands a direct blow on the human development index. According to the United Nations, inequality is the state of not being equal, especially in status, rights, and opportunities.
Inequality in India persists because of lack of access to basic necessities of life like primary healthcare, water & sanitation, education, and energy coupled with absence of productive livelihood opportunities for large swathes of the populace especially in the rural areas.
Social discrimination based on caste, creed, gender and religion cuts across the whole society creating a formidable roadblock for inclusive human development. However, social inequality based on social discrimination is a vast and complex topic and hence not the focus of this blog. Here, I have restricted the discussion of tackling economic inequality arising out of lack of basic necessities and livelihoods. At Creatively Unsettled, we believe that addressing economic inequality will have a multiplier effect leading to the eventual demise of social evils, discrimination, and reduction in social unrest. Economic prosperity coupled with democracy makes a society more aware of its problems, open to diverse points of view and ultimately challenge the status quo.
Economic inequality can be mitigated by addressing issues pertaining to
- Unequal distribution of assets- financial and physical
- Lack of access to basic necessities like primary healthcare, education, water & sanitation and energy
- Lack of access to skills training which leads to fewer livelihood opportunities through job or entrepreneurship
Each of these points will be discussed and dissected in detail in the subsequent posts of this series under #economyforall.
Economic Inequality and Poverty
Economic inequality does not necessarily mean endemic poverty. It means unequal distribution of assets, livelihood, and resources that could generate sustainable income for the holder. Poverty, on the other hand, is the insufficiency of basic necessities and the means to live a normal dignified life.
Just because you cannot afford a Ferrari doesn’t mean that you are poor. Let’s suppose you live in a locality where some of your neighbours (not necessarily next door) are very rich and can afford to buy ultra luxury cars. You cannot buy an expensive car however your standard of living can be easily classified as middle class like most others in your neighbourhood. In this scenario, your locality maybe economically unequal but definitely not suffering from extreme poverty. People living below poverty line are dealing with an existential problem. They don’t have access to basic necessities and productive means to earn a sustainable livelihood. These factors only perpetuate their acute poverty.
A clear example that mirrors this distinction is the one quoted by outgoing Niti Aayog Vice Chairman Arvind Panagariya.
He says, ‘going by the Gini co-effecient, Kerala is the most unequal state and Bihar most equal.’
Bihar, is poor overall. There is no major difference in the income levels of most people there. So, although it lags behind in development, education, and contribution to the GDP of the country, inequality is at its lowest and consistent. Whereas, Kerala on the other hand, being the most progressive state in the country has the highest level of inequality with maximum wealth being concentrated with the top 1-5% of people.
How Do We Address Inequality & Poverty Together?
The income distribution pyramid by Branko Milanovic puts 77% of the world’s population at the bottom of the pyramid with maximum wealth lying in the hands of the top 2%. The best way to tackle this problem is by trying to bridge the income gap between the 2 sections.
Panagariya says that there can potentially be a serious conflict between poverty reduction and reduction in inequality.
“I would focus much more on equality of opportunities, health and education,” Arvind Panagariya, outgoing Niti Aayog Vice Chairman.
If the bottom 77%, (70% in India) were given access to basic necessities and income generation opportunities, this gap could be lessened. Meaning, if the people in the bottom part of the income distribution pyramid were to be empowered and uplifted with concerted efforts by the government and social entrepreneurs, they could rise to the mid income level bracket thereby reducing the gap between the spread of nation’s wealth and wiping out extreme poverty. In that case, the income distribution should ideally be rhomboid.
Poverty and inequality have a co-relation in our country. We could address both of them simultaneously if the Government and Social Entrepreneurs work in tandem to bring basic necessities and livelihood opportunities to the rural populace.
Keep watching this space for our exclusive blog series #economyforall where we will discuss individual issues that lead to inequality in India.
Economyforall is a documentary project that aims to seek answers to all questions related to inequality and can social entrepreneurship address it by reaching out to several entrepreneurs, investors, academicians, journalists and professionals across the social entrepreneurship ecosystem.
Cover image Courtesy – liveinternet.ru