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.
- 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.