The share of national income accruing to the top 1 per cent of income earners is estimated to be about 22 per cent of total income which is said to be the highest level since the adoption of the Indian income tax 1922.
Surprisingly, one super power, the US, is one of the most unequal countries in the world based on Gini Index which measures the extent to which distribution of income varies from perfect equality. It ranks far worse than Portugal which is at the bottom among West European countries.
There are 25 countries in the world with least inequality. Based on distribution of income, Belgium is on top. Income, consumption, and wealth are indicators of financial inequality.
Sustainable Development Goals adopted by UN Member-States in 2015 aim at ending poverty, fighting inequality and injustice, and tackling climate change by 2030. Inclusive development --the over-all aim of the Goals-- specifically covers equitable quality education and gender equality.
Goal No.10 is to “reduce inequality within and among countries”. Human Development Index (HDI) is created by the UNDP to highlight that people and their capabilities should be the criteria for assessing the development of a country and not economic growth alone.
Inequality Adjusted HDI introduced in 2014indicates how a nation’s achievements on three dimensions-health, education, and income – are distributed. States in India are classified on the basis of HDI as High, Medium, and Low.
Generally, worst inequality is found in bigger cities in any country. Posh colonies in the vicinity of slum areas are common in Indian cities. Glaring income inequality can be seen between households in the same locality. Both billionaires and destitute pensioners and recipients of welfare schemes reside in city centres.
State intervention is needed to bridge developmental gap betweenStates and regions. The gap is due to varied causes like differences in per capita income, ratio of population below poverty line, percentage of people employed in agriculture indicating excessive pressure on land which is a cause of poverty, percentage of people under-employed or in seasonal employment.
Unequal level of infrastructure leads to unequallevel of production, quality of services, etc. They are reflected in differential life expectation, infant mortality rate, literacy and educational level, etc., within the country. Inequalities are also spatial,gender-based, andage-based.
Inequalities between generations are growing fast in middle and lower income families. They are less visible in rich families in India, at least in economicterms because of strong legal and conventionalinheritance rights. The rich grow richer with efflux of time and theirfamiliesfor generations reap the benefits.
Generational gap arising from income, education, and employment is growing in middle classes. Enormous increase in pay packets in some sectors and in self-employment inrecent years has introduced economic gap not only between employees in different sectors, but also between generations within families. The gap is bound to grow and make life miserable for the elderly in the absence of social security for the aged.Net and mobile phones have introduced a new inter-generational divide.
Gender-based inequality -- a universal phenomenon -- varies in intensity depending on educational and environmental factors. Reducing inequality requires a policy package comprising inclusive development, employment, investment in education and skill training, universal healthcare, and effective redistributive tax system. Universal basic income scheme can help eliminate acute poverty, but cannot obliterate inequalities.
There are certain other forms of inequalities in India that have settled themselves by long practice. The most disgusting among these are what has come to be termed as “VIP culture” and privileges enjoyed by power holders and celebrities. Some of these privileges are granted by law and regulations and some are assumed without sanction. Review of these is required in the interest of removing unearned benefits.
All said and done, equality is a political ideal to be promoted with political authority. Political parties that promise schemes towards equality often end up in lowering the top rather than uplifting the bottom. The entire politics over Reservation Policy is around correcting inequalities. The policy has widened opportunities but nowhere near achieving an end to inequalities.
Regional and local actors, who have the knowledge of local conditions, have an important role to play in erasing the impression that growth with equity is a far-fetched ideal in India-INFA.(The writer is former Director of ICSSR, New Delhi)
By Dr S Saraswathi
Tags: Indian Income Tax 1922