"The Growing Economic Inequality and Disparity in

India: A Comprehensive Analysis

Context:
• A new working paper, titled “Income and Wealth Inequality in
India, 1922-2023: The Rise of the Billionaire Raj”, by World
Inequality Lab has estimated that “inequality declined post-
independence till the early 1980s, after which it began rising and
has skyrocketed since the early 2000s”.
1. Enlist a few scholars' approach on inequality in India?
Thomas • Thomas Piketty calls the tendency for inequality to
Piketty rise during periods when the rate of return on capital
is higher than the economy's rate of growth “the
central contradiction of capitalism”.
• Thomas Piketty specializes in economic inequality,
taking a historic and statistical approach.
• His work looks at the rate of capital accumulation in
relation to economic growth over a two hundred year
spread from the nineteenth century to the present.

Amartya • Inequality Reexamined is a 1992 book by the

Sen economist Amartya Sen.
• In the book Sen evaluates the different perspectives
of the general notion of inequality, focusing
mainly on his well-known capability approach.

2|Page
 • According to Amartya Sen, inequalities related to
class, gender, and communities hinder the extent of
human freedom and thus decrease our ability to
function.
• That is why a good society ought to mitigate such
discrimination, promoting people's freedom which is
the most valuable element of a satisfactory life.

Abhijit • The Nobel laureate economists, Abhijit Banerjee

Banerjee and Esther Duflo said that India is now among the
and Esther most unequal countries in the world.
Duflo
• The gap between the top 1% and the bottom 50% is
wider for India than the United States, the United
Kingdom, China, Russia and France.
• They emphasized the need for a pedagogy that
encourages curiosity and independent thinking
over rote learning.
• They have pioneered the use of experimental
methods to assess the effectiveness of various anti-
poverty interventions, such as education
programs, healthcare initiatives, and small-scale
economic policies.

3|Page
2. What is the status of inequality in India?

4|Page
 Indicators Description
Extreme • As per World Inequality Lab, In 2022-23, India’s
levels of top 1% own 22.6% of India’s national income
inequality in and 40.1% of the country’s wealth.
India
• This is higher than even during the inter-war
colonial period.

Emergence of • The period between 1990 to 2022 witnessed a rise

very high net in national wealth and the emergence of very high
worth net worth individuals.
individuals
• The number of high net worth individuals has
increased from 1 to 52 to 162 in 1991, 2011 and
2022 respectively.

5|Page
Extreme • Between 1961 and 2023, the top 1% wealth share
wealth has increased threefold, from 13% to 39%.
concentration
at the very • Most of these gains came post-1991 after which
top point top 1% shares have been on a steep upward
trend right until 2022-23.

6|Page
The State of • Around 74% of India’s population could not afford
Food Security a healthy diet, and 39% fell short of a nutrient-
and Nutrition adequate one.
in the World,
2023

According to • India’s 2023 GHI score is 28.7, considered serious

Global according to the GHI Severity of Hunger Scale.
Hunger Index
2023

7|Page
3. What is the status of inequality in the world?

As per the working paper by World Inequality Lab which titled

‘Income and Wealth Inequality in India, 1922-2023: The Rise of the
Billionaire Raj-
• India’s top 1% income share and wealth share is among the very
highest in the world, behind only perhaps Peru, Yemen and a
couple of other small countries.
• India has one of the highest wealth and income inequality in the
world.

8|Page
 Dimension Description
Wealth • India is one of the most unequal countries in the
Inequality world, with the top 10% of the population
holding 77% of the total national wealth.

Income • According to the World Inequality Report 2022,

inequality India is among the most unequal countries in the
world, with the top 10% and top 1% of the
population holding 57% and 22% of the total
national income respectively.

9|Page
4. What is the Landscape of Inequality in India?

10 | P a g e
5. What are the factors responsible for rising inequality
in India?
Factors Analysis
Lack of Access to • Land, a critical resource in agrarian
Resources economies like India, is often concentrated in
the hands of a few, perpetuating economic
disparities.
• Land reform policies have faced challenges in
implementation, hindering the distribution of
land to marginalized communities.

11 | P a g e
Disparities in
Education

Discrimination in • Workplace discrimination based on caste,

the Workplace: gender, and religion remains a significant
hurdle.
• Affirmative action policies, while
commendable in intent, face resistance and
implementation challenges, preventing
marginalized groups from enjoying equal
opportunities in employment.

12 | P a g e
High level of in- • In terms of employment share the unorganized
formalization of sector employs 83% of the work force and
economy 17% in the organized sector.
• There are 92.4% informal workers (with no
written contract, paid leave and other
benefits) in the economy.
• There are also 9.8% informal workers in the
organized sectors indicating the level of
outsourcing.

13 | P a g e
Jobless growth in • India experienced job growth of 3% p.a in the
India 70s at a time when our economy grew at 3-
3.5% p.a but over the last 3 decades our
economy grew at over 5-8% p.a but our job
growth has been close to 1% p.a.

Regional • The uneven distribution of resources and

Disparities opportunities between urban and rural areas
further deepens the inequalities.
• States like Bihar and Jharkhand face higher
levels of poverty and limited access to
essential services compared to more
prosperous regions.
Digital inequality

14 | P a g e
Social Exclusion

Demonetization • In 2016, the Indian government implemented a

Impact bold policy of demonetization, withdrawing
high-denomination currency notes to curb
black money and corruption.
• While the intention was to promote financial
transparency, the impact on various segments
of the population, especially those in the
informal sector, raised concerns about its
efficacy in addressing inequality.

Effectiveness of • While India has implemented various social

Social Welfare welfare programs to address inequality, their
Programs effectiveness is often marred by bureaucratic
inefficiencies, corruption, and inadequate
reach.

15 | P a g e
6. What are the challenges of rising inequality in India?
Challenges Implications
Poor
healthcare

Rising school • According to data from the Ministry of Education,

dropouts. in the 2021-22 academic year, seven states,
including Bihar, Uttar Pradesh, and Gujarat, had
secondary-level school dropout rates exceeding
the national average of 12.6%.

16 | P a g e
Vicious cycle
of poverty

Migration • As per the Report Migration in India, 2020-21,

based on Periodic Labour Force Survey (PLFS)
2020-21, released by Ministry of Statistics and
Programme Implementation (MoSPI), the total
migration rate in India was 28.9% and in rural
was 26.5%.

High Crime • Inequitable distribution of wealth leads to lower

Rates social trust and higher crime rates.

17 | P a g e
Rising
subsidies
burden

• As per World Bank subsidy in the agriculture,

fishing, and fossil fuel sectors exceeded USD 7
trillion, equivalent to 8% of the global gross
domestic product.
Social Unrest • In the recent annual World Employment and
Social Outlook report, ILO has held that :
• As many as 267 million young people between the
ages of 15 and 24 are not employed, educated or
trained which is contributing to the social unrest
caused across the globe.
• The report draws a very strong connection between
social unrest, unemployment and
underemployment.
• As per a given report 10% increase in inequality
measures increases by 6.5% the unconditional
probability of observing social unrest in a village in
a given month.

18 | P a g e
7. What steps have been taken by the government to
reduce inequality in India?
Initiatives Analysis
Affirmative • Reservation policies in education and
Action employment have been instrumental in providing
opportunities to historically marginalized
communities.
Pradhan • Pradhan Mantri Awas Yojana is a credit-linked
Mantri Awas subsidy scheme by the Government of India to
Yojana facilitate access to affordable housing for the
(PMAY) low and moderate-income residents of the
country.
• It is one of the largest affordable housing
programmes in the world.
• So far, a total of 60 lakh houses are in various
stages of construction and nearly 32 lakh houses
have been complet

19 | P a g e
Pradhan • PMJDY brings about the objective of financial
Mantri Jan inclusion for all by providing basic banking
Dhan Yojana accounts with a debit card with inbuilt accident
(PMJDY) insurance.
• The main features of PMJDY include Rs. 5,000
overdraft facility for Aadhar-linked accounts and
a RuPay debit card with inbuilt Rs. 1 lakh
accident insurance cover.

Mahatma • Mahatma Gandhi National Rural Employment

Gandhi Guarantee Act 2005 or MGNREGA, earlier
National Rural known as the National Rural Employment
Employment Guarantee Act or NREGA, is an Indian social
Guarantee Act welfare measure that aims to guarantee the
Scheme 'right to work'.
(MGNREGA)

20 | P a g e
 • It provides social protection for the most
vulnerable people living in rural India by
guaranteeing wage employment opportunities.

Samagra • It is an Integrated Scheme for School

Shiksha Education.
Abhiyan
• This programme subsumes the three erstwhile
Centrally Sponsored Schemes of Sarva Shiksha
Abhiyan (SSA), Rashtriya Madhyamik Shiksha
Abhiyan (RMSA) and Teacher Education (TE).

21 | P a g e
Ayushman • Ayushman Bharat is also known as Pradhan
Bharat Mantri Jan Arogya Yojana (PM-JAY).
• It provides insurance coverage of up to ₹5 lakh
per family per year for hospitalization and
medical treatments, targeting over 50 crore
beneficiaries.

Deendayal • NULM replaced the existing Swarna Jayanti

Antyodaya Shahari Rozgar Yojana (SJSRY) and is known
Yojana- as Rashtriya Shahari Ajivika Mission in Hindi.
National
Urban • It focuses on organizing urban poor in their
Livelihoods strong grassroots level institutions by enhancing
Mission (DAY- sustainable livelihood opportunities through skill
NULM) development.
• It aims at leading poor to market-based
employment and helping them to set up self-
employment ventures by ensuring easy access to
credit.

22 | P a g e
8. What is the Supreme Court’s take on Inequality in
India?
In D.S. Nakara v. Union of India (1983), the Supreme Court held
that the primary objective of a socialist state is to eradicate
inequality in income, status, and the standard of living.

9. What should be the way ahead?

1. Education Reforms:
• Investing in quality education and addressing disparities in access can
empower future generations, breaking the cycle of poverty and
contributing to a more skilled and competitive workforce.

2. Enhanced Social Protection:

• Strengthening social protection programs, including healthcare
and social security, can provide a safety net for vulnerable
populations, reducing the impact of economic shocks.

23 | P a g e
3. Need for Inclusive Policy Design:
• The experience with GST underscored the importance of
designing policies that consider the diverse nature of India’s
economy, with a focus on supporting small businesses and informal
sectors.

4. Role of Technology and Innovation:

• Leveraging technology for inclusive growth and innovation can
bridge gaps in access to information, education, and financial
services.
• Digital platforms and innovations in agriculture, healthcare, and
education have the potential to uplift marginalized communities.
5. Importance of Sustainable Development Goals (SDGs):
• Aligning efforts with the broader SDGs is essential for
comprehensive and sustainable development.
• Reduced inequality is not only a goal in itself (SDG 10) but also a
catalyst for achieving other goals related to poverty eradication,
health, and education.

10. What are some best practices adopted to reduce

inequality in India?
Kerala’s Development Model
• Kerala, often hailed for its unique development trajectory, has
stood out as a beacon of success in reducing inequality.
• The state’s journey began in the mid-20th century, marked by
visionary leadership and a commitment to social justice.
• Land reforms initiated in the 1950s aimed to address the historical
concentration of land among a few elite families, thereby
empowering marginalized communities.

24 | P a g e
• The focus on education and healthcare, driven by the ‘Kerala
Model,’ further set the stage for inclusive development.

Achievements:
• Human Development Indicators:
 Kerala consistently boasts impressive human development
indicators, with high literacy rates, life expectancy, and low
infant mortality rates.
• Social Welfare Programs:
 The state’s commitment to social welfare programs, including
the expansion of healthcare facilities and educational
institutions, has created a more egalitarian society.
• Empowerment of Marginalized Communities:
 Through affirmative action policies, Kerala has empowered
historically marginalized communities, ensuring their
participation in the socio-economic fabric of the state.

Self-Help Groups in Rajasthan

• Rajasthan, a state with a diverse cultural heritage, faced challenges
related to economic disparities and gender inequality.
• The introduction of self-help groups (SHGs) in the late 20th century
aimed to address these issues by promoting economic self-
sufficiency among women in rural areas.
• The initiative gained momentum as a grassroots movement,
empowering women and fostering community development.

25 | P a g e
Achievements:
• Economic Empowerment:
 SHGs in Rajasthan have been instrumental in providing women
with the means to generate income, breaking the cycle of
poverty and dependency.
• Social Cohesion:
 Beyond economic benefits, the SHG model has fostered social
cohesion and community development, strengthening the social
fabric in rural areas.
• Skill Development:
 Women involved in SHGs often acquire new skills, enabling
them to diversify their economic activities and contribute
meaningfully to the household and community.

11. What is the relevance of the topic for UPSC CSE?

• For Prelims: WEF, GDP, GST, Growth, GHI score, Global Gender
Gap Report, OECD, Mahatma Gandhi National Rural Employment
Guarantee Act Scheme (MGNREGA), National Rural Health Mission
(NRHM), Pradhan Mantri Jan Dhan Yojana
• For Mains: Recent Economic Growth Trajectory of India, Inequality
Trends in India, Increasing Inequality in India, Inclusive Growth,
Steps to Achieve Inclusive Growth in India.

Some previous years prelims questions.

Q1. Inclusive growth as enunciated in the Eleventh Five Year Plan
does not include one of the following: (2010)
(a) Reduction of poverty
(b) Extension of employment opportunities
(c) Strengthening of capital market
(d) Reduction of gender inequality
Ans: (c)

26 | P a g e
Some previous years mains questions.
Q1. COVID-19 pandemic accelerated class inequalities and poverty in
India. Comment. (2020)

Some questions from this year and previous years

interview transcripts.
Board Sanjay Verma sir (2024)
• What are the types of inequalities in India?
• Reason for north south inequalities (based on previous
answer...corrected me by saying it is more kind of discrimination)
• How to bridge the gap of regional inequality?
• How do you see these inequalities in the coming 20 years?

Board Dinesh Dasa sir (2024):

• Do you think inequalities exist in India? If yes, why. If not, why?

Board Sheel Vardhan sir (2024):

• What is the worst form of inequality in the country?

Board Raj Shukla sir (2024):

• What is Spoofing and Cloud Computing?
• Since you are a mathematical person you must be very familiar with
equality, then tell me how does A.I. impact equality?
• Then AI is a bad technology since it increases inequality. What are
your views about it?

27 | P a g e
Some questions for QUIZ.
Q1. World Inequality Report is published by which of the following
organizations.
(a) World Bank
(b) IMF
(c) World Economic Forum
(d) World Inequality Lab
Ans: (d)

Some questions for POLL.

Q1. Do you think inequalities exist in India?
(a) YES
(b) NO
(c) Can’t say.

Q2. Does inequality have increased in the post Covid era?

(a) YES
(b) NO
(c) Can’t say.



28 | P a g e