• UGI USER
  • Jan 10, 2024
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INCOME INEQUALITY DECLINES: SBI RESEARCH

Why in the News?

  • State Bank of India’s Economic Research Department disputes claims of a K-shaped recovery as “prejudiced” and “ill-concocted.”

Key Highlight of the Research:

  • India’s income inequality decreases, fueled by a higher tax base.
  • Shifting taxpayers to higher income brackets contributes to this decline.
  • Small firms transforming into larger entities and evolving consumption trends, like increased food ordering, signify reduced inequality.
  • A substantial 363% rise in taxpayers moving to higher income brackets results in an added income of 21.3%.
  • Income growth is evident across all classes with reduced skewedness, indicating a shift toward middle-income levels.
  • The Gini coefficient exhibits a noteworthy decrease in income inequality from 0.472 to 0.402 during FY14-FY22.
Key Terms

Gini coefficient

·   The Gini coefficient is a statistical measure of income inequality within a population.

·   It ranges from 0 to 1, where 0 represents perfect equality (everyone has the same income) and 1 signifies perfect inequality (one individual has all the income).

Source: Steemit

·   The coefficient is calculated by plotting the Lorenz curve, a graphical representation of income distribution, and measuring the area between this curve and the line of perfect equality.

·   A smaller Gini coefficient indicates a more equal distribution.

K-shaped recovery

K-shaped recovery refers to an economic rebound where different sectors or groups recover unevenly. While some segments experience growth or improvement, others face decline or stagnation.