THE RISING OF INEQUALITY IN INDIA

INTRODUCTION

Inequality refers to the condition of being unequal or having differences in terms of various attributes, characteristics,
opportunities, or resources within a particular group, community, or society. This concept can manifest in different dimensions,
including economic, social, political, and cultural aspects. Inequality can occur at various levels, such as individual, regional, or
global, and it may involve disparities in income, wealth, education, health, and other factors.
As of my last knowledge update in January 2022, income inequality in India had been a concern, and it was acknowledged that
inequality had been rising over the preceding decades. However, specific data might have changed, and it's advisable to check more
recent sources for the latest information. Here are some general trends and factors contributing to rising inequality in India over the
past two decades:
Economic Growth: India has experienced significant economic growth, but the benefits have not been distributed evenly. The wealth
1.
generated from this growth has often been concentrated among the affluent, leading to an increase in income and wealth disparity.

2.Informal Economy: A substantial part of India's workforce operates in the informal sector, where job security and benefits are
often lacking. This contributes to income disparities as those in the informal sector may struggle to access the same opportunities and
benefits as those in the formal sector.

3.Urban-Rural Divide: Economic growth has been more pronounced in urban areas compared to rural regions. This urban-rural
divide contributes to disparities in income, access to education, and healthcare
1.Education Disparities: Unequal access to quality education perpetuates income inequality.
Individuals with better educational opportunities have a higher likelihood of securing well-
paying jobs.
2.Technological Changes: While technological advancements have contributed to economic
growth, they have also led to job displacement for certain segments of the population. Those
who are not able to adapt to technological changes may face challenges in income generation.
3.Globalization: Increased globalization has brought economic opportunities, but it has also
led to disparities. Certain sectors and skilled individuals may benefit more from globalization,
contributing to income gaps.
4.Policy Issues: The effectiveness of government policies in addressing inequality plays a
crucial role. If policies are not designed or implemented effectively, they may fail to bridge
the income gap.
5.Caste and Social Disparities: Historical factors, including the caste system, can contribute
to social and economic disparities. Discrimination based on caste can affect economic
opportunities for certain groups.
Thomas Piketty is a French economist renowned for his work on economic
inequality, particularly his influential book "Capital in the Twenty-First Century,"
published in 2013. The book became a bestseller and sparked global discussions on
wealth and income disparities. Here are some key aspects of Piketty's work:
 The share of the top decile (the 10 percent of highest earners) in total national income ranged from 26 to
34 percent in different parts of the world and from 34 to 56 percent in 2018. Inequality increased
everywhere, but the size of the increase varied sharply from country to country, at all levels of
development. For example, it was greater in the United States than in Europe (enlarged European Union,
540 millions inhabitants) and greater in India than in China.

Thomas Piketty's central argument on inequality, as presented in his influential book "Capital in the
Twenty-First Century," revolves around the concept that economic inequality tends to increase over
time, especially when the rate of return on capital (r) exceeds the rate of economic growth (g). Here
are the key elements of Piketty's central argument:
1.R > G (r greater than g): Piketty's central thesis is encapsulated in the formula "r > g," where 'r'
represents the rate of return on capital and 'g' represents the rate of economic growth. The core idea is
that when the return on capital (profits, dividends, interest, etc.) is greater than the overall economic
growth rate, wealth accumulated through capital tends to grow faster than wealth generated through
labor.
2.Historical Perspective: Piketty draws on extensive historical data to support his argument. He
examines economic data from various countries over several centuries and concludes that, in the
absence of exceptional circumstances (such as the post-World War II period), the rate of return on
capital tends to be higher than the rate of economic growth.
3. Concentration of Wealth: When 'r' is consistently greater than 'g,' it leads to the
concentration of wealth among the owners of capital. In other words, those who own and
accumulate capital (financial assets, real estate, etc.) see their wealth grow at a faster rate than
the overall economy, widening the gap between the rich and the rest of the population.
4.Implications for Society: Piketty argues that this trend toward increasing wealth inequality
has significant social and economic implications. It can lead to the entrenchment of inherited
wealth and the emergence of a wealthy elite with disproportionate influence and power in
society.
5.Policy Recommendations: In response to these trends, Piketty suggests policy interventions
to curb inequality. One of his prominent proposals is the implementation of a global
progressive tax on wealth to prevent the concentration of wealth over generations.
Piketty's work has stimulated widespread discussion and debate on the causes and
consequences of economic inequality. While his ideas have been influential, they have also
faced criticism and sparked ongoing research and discussions about the complexities of wealth
distribution and the role of policy in addressing inequality
• Three years after writing a best-selling book on the growing problem of inequality in the
Western world, the French economist Thomas Piketty has turned his attention to inequality in
the developing world. In a recent research paper co-authored with Lucas Chancel of the Paris
School of Economics, Piketty estimates that the share of the top 1% in India’s income pie is
higher than ever before.

Based on their analysis of historical data—from tax sources, surveys and national accounts
statistics—the duo shows that the share of the top percentile (or top 1%) in India’s national
income pie is at its highest level (22%) since 1922. This share had declined from 21% in the
late 1930s to less than 6% in the early 1980s. They also argue that the period between 1951
and 1980 witnessed a decline in the share of the super-rich in the national income pie, and a
rise in the share of the bottom half of India’s population. Between 1980 and 2014, the
situation has reversed, they argue.
 Income share of top 1 present (Chancel and piketty2017)
Distributional analysis in India is most commonly based on consumption data derived from
India’s National Sample Surveys. Consumption inequality in India as a whole has been
rising at a moderate pace since the early 1990s. The increase accelerated between 1993/4–
2004/5 and then moderated somewhat — being most pronounced in urban areas
• Distributional analysis in India is most commonly based on consumption data derived from
India’s National Sample Surveys. Consumption inequality in India as a whole has been rising
at a moderate pace since the early 1990s. The increase accelerated between 1993/4–2004/5
and than moderate somewhat, being most pronounced in urban area
• Data on income inequality in India are less readily available. One recent, widely
discussed, study produced a long historical time series of income inequality
estimates based on the combination of multiple data sources and novel techniques
(Chancel and Piketty 2017). The study suggests that income inequality in India
declined sharply between the 1950s and 1980s but has increased thereafter. Since
the 1980s, the income share of the top 1% has been increasing, reaching 22% for the
most recent year for which estimates are available . and then moderated somewhat
— being most pronounced in urban areas