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. 

 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.

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