• UGI USER
  • Apr 29, 2024
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“ADDRESSING INEQUALITY: EXPLORING MEASURES FOR EQUITABLE GROWTH IN INDIA”

Syllabus:

  • GS-3-Inequality in India and its impact

Focus :

  • Top of Form
  • Income inequality in India is stark, with the top 1% owning 22.6% of national income and 40.1% of wealth in 2022-23.
  • From 1990 to 2022, the number of very high net worth individuals rose from 1 to 162, while income tax filers increased from 1% to 9% between 2017-2020.
Source - TH

Introduction:

  • Debate sparked by Congress’s Nyay Patra on inequality and wealth concentration.
  • Prime Minister’s comments on wealth redistribution prompt discussions.
  • Rising inequality evidenced by World Inequality database, posing questions on growth.
Status of Inequality in India :

1.  Growth in Average Incomes:

  • India’s average income witnessed a real-term growth rate of 2.6% annually from 1960 to 2022.
  • This steady growth reflects the overall improvement in economic conditions and standards of living over the decades.

2.  Emergence of Very High Net Worth Individuals:

  • Between 1990 and 2022, India experienced a significant rise in national wealth, leading to the emergence of very high net worth individuals.
  • The number of individuals with net wealth exceeding $1 billion increased from 1 in 1991 to 162 in 2022, signifying a notable expansion in wealth concentration.

3.  Rise in Percentage of Income Taxpayers:

  • The proportion of adult population filing income tax returns witnessed a remarkable increase over the years.
  • From a mere 1% until the 1990s, the share rose to 5% in 2011 and further to 9% during the period between 2017 and 2020.
  • This trend suggests a broader tax base and potentially improved compliance with tax regulations.

4.  Extreme Levels of Inequality in India:

  • In 2022-23, India’s top 1% of the population owned 22.6% of the national income and a staggering 40.1% of the country’s wealth.
  • This level of wealth concentration underscores the deep-seated inequality within Indian society, surpassing even the disparities witnessed during the colonial British Raj.
  • The term “Billionaire Raj” symbolizes the dominance of India’s modern bourgeoisie, highlighting the exacerbation of inequality in contemporary times.

Election Issue and Political Economy:

  • Inequality as a core election issue, reflecting concerns about economic disparities.
  • Failure of trickle-down economics, emphasis on supporting ‘wealth creators.’
  • Shift towards addressing inequality marks a significant political economy shift.

Redistribution Measures and Taxation:

  • Public discussion focused on direct redistribution measures like taxing the rich.
  • India’s low tax-GDP ratio and regressive taxation structure.
  • Need for progressive taxation to address wealth inequality effectively.

Low Welfare Spending and Social Sector Allocation:

  • Low public spending on health and social sectors compared to other countries.
  • Challenges in achieving National Health Policy targets amidst COVID-19.
  • Decline in budget allocations for crucial sectors like MGNREGA and education.

Questioning Nature of Growth:

  • Focus on generating employment through equitable growth.
  • Declining employment elasticity of output amidst jobless growth.
  • Importance of creating decent jobs with adequate remuneration.

Role of Government in Job Creation:

  • Government’s role in directly creating jobs through public services expansion.
  • Importance of filling existing vacancies and improving quality of jobs.
  • Direct job creation efforts to improve human development outcomes and reduce inequality.

Employment-Centered Growth Policies:

  • Supporting small and medium enterprises for labor-intensive growth.
  • Promoting skill training and human capital development.
  • Enabling women’s participation in the labor market through supportive policies.

Conclusion:

  • Need for a shift towards employment-centered growth for addressing inequality.
  • Importance of government policies in promoting equitable growth and reducing disparities.
  • Emphasizing the role of employment in tackling intergenerational inequality and promoting economic development.

Source:The Hindu

Mains Practice Question :

 GS-3

“Discuss the significance of addressing inequality as a core election issue in India, focusing on measures such as taxation reforms, welfare spending, and employment-centered growth policies. Evaluate the role of government in promoting equitable growth and reducing economic disparities in the country.” (250 words)