Question -“India’s economic growth is linked with increasing inequality”. What can be the reason for this, and what is the solution to minimize it?

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Question -“India’s economic growth is linked with increasing inequality”. What can be the reason for this, and what is the solution to minimize it? – 2 April 


  • According to the World Social Report 2020, “Inequality in a rapidly changing global landscape is reflected when we face the harsh realities of a deeply unequal world, In both the North and the South, the combination of economic crisis, increasing inequality and job insecurity has led to large-scale rebellion demonstration. Income inequality and lack of opportunities, is the reason of vicious cycle of inequality, frustration and discontent.
  • India’s per capita gross domestic product (GDP) increased five-fold between 2000 and 2019, rising from the then USD 443, to USD 2014 in 2019.
  • This does not mean that the income of the entire population has increased. The top one percent in India earned 21 percent of the country’s total income in 2019. It was 11 percent in 1990.
  • The top 10 percent earned 56 percent of the country’s total income in 2019; and the lower 10 percent earned only 3.5 percent.
  • There is also a similar story of wealth distribution. The richest 10 percent of Indians had 80.7 percent of their wealth in 2019.
  • The “Gini coefficient” indicates increasing inequality in India. The coefficient was 34.4 percent in 2014 (indicating 100 percent absolute inequality and 0 percent absolute equality). The coefficient increased to 35.7 percent in 2011 and 47.9 percent in 2018.
  • Agricultural is one of the major routes of livelihood in the villages. According to the latest 2011 census data, a total of 26.3 crore households in India are involved in farming activities. The proportion of small and marginal farmers increased from 84.9 percent to 86.2 percent during 2010–11 and 2015–16, while the total number of operational land holdings increased from 138 million to 146 million.

Measures to reduce inequalities:

Intensive Inclusive Development:The promotion and adoption of an inclusive development agenda is the only solution to the problem of increasing inequality. Economic growth that is not inclusive will only increase inequality.

Skill development: If India wants to use its demographic dividend, development of advanced skills among the youth is a prerequisite condition. With increasing investment in education, skilled youth is the only way we can reduce inequality. India needs to become a skill-led economy.

Progressive tax structure: Higher taxes on the rich and luxury will help reduce income inequalities.

Equal Opportunity for All: The government can set up some machinery that can provide employment to all citizens and provide an equal opportunity in business and industry. In other words, in case of choice of profession, some extra effort can be made to eliminate the influence of family. For example, the government may establish a system of generous monthly stipends and scholarships, allowing even the poorest people in society to obtain the highest education and technical skills.

Thus, “low inequality” lies at the core of the country’s real economic progress,only by minimizing this, inclusive development can be imagined.

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