Addressing Inequality in India

Addressing Inequality in India

News: ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj‘ – a working paper by World Inequality Lab has brought to limelight the status of inequality in India. 

Background:
 The paper says, from post-independence till the early 1980s, inequality declined in India. However, post 1980 inequality began to rise and skyrocketed since the early 2000s.
 The report combines data from national income accounts, wealth aggregates, tax tabulations, rich lists, and surveys on income, consumption, and wealth to arrive at the results.

Key Findings:
 India’s average income grew at 2.6% per year in real terms between 1960 and 2022.
 The period between 1990 to 2022 saw emergence of very HNI’s. The number of HNI’s has increased from 1 to 52 to 162 in 1991, 2011 and 2022 respectively.
 In 2022-23, India’s top 1% own 22.6% of India’s national income and 40.1% of the country’s wealth.
 Between 1961 and 2023, the top 1% wealth share has increased threefold, from 13% to 39%.
 The paper finds that the share of adult population that filed an income tax return — which had remained under 1% till the 1990s, By 2011, the share had crossed 5% and the last decade too saw sustained growth with around 9% of adults filing a return in the years 2017-2020.

Challenges to address inequality:
 Fewer women participating in the labour work force
 Health and education schemes lack adequate coverage which leads to higher out of pocket expenditure of poor people. 
 High growth rates have primarily benefited certain sectors and regions, leading to a concentration of wealth and opportunities among a relatively small portion of the population.
 Informal economy presents its own challenges such as lack of job security, lack of social protection and deprivation of access to financial services/products.

Government of India’s initiatives to reduce inequality
 Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): This scheme provides employment opportunities in rural areas by guaranteeing 100 days of wage employment to every household. It aims to create livelihood opportunities and reduce poverty.
 Prime Minister’s Employment Generation Programme (PMEGP): PMEGP encourages entrepreneurship by providing financial assistance for setting up micro-enterprises. It focuses on generating employment and promoting self-employment.
 Pradhan Mantri Rojgar Protsahan Yojana: This scheme incentivizes employers to hire more workers by contributing to their Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) contributions. It aims to boost formal sector employment.
 Pt. Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY): DDU-GKY focuses on skill development and placement for rural youth. It aims to enhance employability and bridge the skill gap.
 Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM): DAY-NULM targets urban poverty reduction by providing skill training, self-employment opportunities, and social security to vulnerable sections.
 Ayushman Bharat - National Health Protection Scheme: This health insurance program aims to cover over 10 crore poor and vulnerable families, providing coverage up to ₹5 lakh per family per year for secondary and tertiary care hospitalization.
 Institutional Credit for Agriculture: The government has proposed an increase in institutional credit for agriculture to ₹11 lakh crore during 2018-19. This supports farmers and promotes rural livelihoods.
 Social Security Schemes: Initiatives like Pradhan Mantri Suraksha Bima Yojana (Accident Insurance), Atal Pension Yojana (Unorganized Sector), and Pradhan Mantri Jeevan Jyoti Yojana (Life Insurance) expand the social security net.
 MUDRA Bank: The Micro Units Development and Refinance Agency (MUDRA) provides microfinance to entrepreneurs in rural areas, supporting small businesses.
 National Hub for SC/ST Entrepreneurs: Created to empower marginalized communities, this hub supports SC/ST entrepreneurs.

Way Forward
 The government should levy wealth tax and super tax on Indian billionaires and multimillionaires. 
 The government should raise the minimum wage rate especially in the unorganized sector wherein people get very less social security benefits like gig workers and gig economy.
 The government of India must invest 6% of GDP in Education and 2.5% of GDP in Health to ensure equitable development and reduce inequalities in the country.
 Focused efforts on digitization and JAM usage in order to reduce inclusion and exclusion errors in schemes.