Economic inequality in India is on rise. What are its consequences and the reasons behind it? Discuss.

India’s Gini coefficient value hovers around 0.9 on the Lorenz curve, where the value 1 is perfect inequality and 0 is perfect equality. Inequality has both vertical and horizontal dimensions.

Causes of Economic Inequality:

  • 43% of Indians depend on the agriculture sector, which contributes only 16% to the GDP, whereas the service sector employs 23% and contributes around 55% to the GDP.
  • Regional disparities in terms of economic development.
  • Social inequalities based on caste and gender further lead to economic inequality. The green revolution widened the caste disparities and led to the caste-class continuum.
  • Disparities in education which suffer from commercialization, caste monopoly, and class monopoly, also make it a privilege for a select few leading to economic inequalities.
  • Failure of the welfare state leads to economic inequality.
  • The shift towards indirect taxation which is regressive in nature leads to inequality.


  • The vicious cycle of social and economic inequality.
  • The market becomes a monopoly of a few and labour remains a mere commodity.
  • Failure of the state to reap the benefits of demographic dividend.
  • Security problems like Naxalism and Regionalism rise due to inequality.
  • Increase in incidence of multidimensional poverty and fall in human development.
  • India moved rapidly from a low-income country to a lower-middle-income group but it seems to have stagnated there.
  • There are the world’s largest billionaires in India and also the largest population of child labour.

Required Measures:

  • Emphasis on progressive taxation instead of regressive one.
  • Appropriate utilization of corporate social responsibility funds.
  • Expanding the manufacturing base and generating indigenous employment while simultaneously making agriculture more productive.
  • Rationalization of subsidies and decreasing exclusionary problems.
  • Improving avenues of skill development and vocational training.

Initiatives like the social stock index, the Bare necessities index, and encouraging NGOs and civil societies to work for socio-economic development must be supplemented with an efficient cooperative culture-making rural India self-sufficient to decrease the over rising economic inequality.


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