Causes and Effects of Income Inequality in India

India is the second populous country in the world and the leading democracy in the world. By the end of 2015, India had the lowest income inequality among BRICS countries, even though it is still high when compared with developed nations in the world. According to the World Wealth Report of 2015, India had 198,000 net worth people, with total wealth of $785 billion. The causes and effects of income inequality in India are varied. For example, the disparity largely comes from the agricultural sector and the safety nets, which are in bad shape. India’s agricultural sector is not performing well.

In addition, the country has poor power, and road infrastructure, which weigh heavily on the efforts of attaining equality among its over a billion people. Notably, the safety net programs are no longer functioning, with several public systems performing below their potential. Because of this, Indians in rural areas are suffering as the gap between the rich and the poor widens. Consequently, those in rural areas are getting poorer every day, as they cannot access education and good healthcare. The poor work for long hours yet they earn low wages, and they lack basic services such as first aid, sanitation and drinking water.

What are the Causes and effects of income inequality in India?

India is one of the emerging economies in the world today. However, it still grapples with cases of income inequality between the poor and the poor in the society. Today, the gap is widening with a smaller percentage of the population enjoying life as the vast majority suffer in abject poverty. Here are the causes and effects of income inequality in India you should know:

The first cause is undermining equality in India is growth factor. With economic growth taking place at a higher rate than before, different people in the country continue to earn differently. In particular, the incomes of Indians in upper and middle quartiles are rising faster as compared to those for the poor do. This is a common phenomenon when an economy is in its growing stage. The main explanation for this disparity is the shift from an agricultural economy to an industrial economy. Today, India’s industrial sector is growing exponentially while agriculture is experiencing stunted growth. Since agriculture is employing fewer people, the sector accounts for a smaller proportion of the total income in the country.

Unequal Asset Distribution – Other causes and effects of income inequality in India stem of what the people own. India has high level of unequal asset ownership. In India, the two main sources of income for people are assets and labor. Common assets include land, cattle, and shares among others. In India, a small population owns almost all the assets, which generate the highest income. Others organize themselves in cooperatives or use financial institution to acquire productive assets.

Important causes and effects of income inequality in India

Besides growth factor and unequal ownership of property in India, inadequate job creation is another cause of income inequality in the country. It is clear that the poor group would improve their living standards and earn decent incomes if they had work to do with their skills. This is to say that if they did not have asset earnings, they would derive their wealth labor.

Another cause is differential regional growth. In India, the poor live in backward states while the filthy rich live in leafy suburbs. This cuts across the whole country. Additionally, the disparities exist in states of the same class where people earn different incomes comparatively.  This is a product of different states experiencing varied economic growth. While few enjoy exceptional growth, many lag behind.

Because of income inequality in India, poverty is cutting across several states. States with majority of people earning low incomes have high rates of poverty. Here, children hardly access education with poor social amenities dotting the country. Besides poverty, India still grapples with poor infrastructure. For instance, its road network especially in poor states undermines the ability of people to enjoy good life. Based on causes and effects of income inequality in India, it is possible for the government to adopt policies that will promote an equal society.

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References

Causes, Consequences and Measures to Reduce Inequality of Income Distribution

http://www.ditchley.co.uk/conferences/past-programme/2010-2019/2012/income-inequality

https://www.childfund.org/Content/NewsDetail/2147489377/

What are the Important Causes of Income Inequalities in India?

http://www.kulkarnibooks.com/assets/downloads/kishore_papers/Growth_and_Inequality_in_India_with_keith.pdf