Oxfam International’s report titled “An Economy of the 99 percent”, released at World Economic Forum 2017, brought to light the income inequality issue in India. According to the report, India’s richest 1% holds 58% of the country’s wealth and that 57 billionaires in India have the same wealth as that of bottom 70 percent of the population. The statistics show the status of inequality in India.
Though inequality generally brings to our mind economic and income inequalities, inequality also includes social, political and gender inequality. Inequality is felt with respect to choice, opportunity, accessibility, and affordability. India ranks 131 on Human Development Index which ranks countries based on life expectancy, education and per capita income indicators. On the Global Gender Gap Index 2017, India ranks 108. Inequality is also felt in the rural-urban scenarios.
Reasons for Inequality in India
The following can be listed as the reasons for inequality in India.
- Historical reasons: Discrimination against certain sections of the society since historic times. This has affected their choice, opportunity, and accessibility to education, employment and health. Though policies like Reservation have been implemented since Independence, they were successful only in the economic and political sphere that too to a limited section of people but failed largely in social upliftment.
- Females were always treated to be subordinate and weaker to males. Girl education is considered to be a burden on the family and women have limited choices in employment.
- Large-scale informal employment: 80% of the Indian labour force is employed in the informal sector. Informal sector jobs are more insecure without regular pay and social security benefits. This increases the wage gap between formal and informal sectors.
- A huge proportion of the population is still dependent on agriculture but the share of agriculture to the total GDP is falling.
- Inter-state inequalities: Growth has been different across sectors and regions. For examples, Green Revolution has disproportionately benefitted Western and Southern India when compared to Eastern India.
- Studies show that globalization and opening up the economy has benefited the rich more than the poor, thus raising the inequality. Global platforms like WTO have resulted in increased trade competitiveness affecting the returns of local investors and producers.
- According to the paper by famous Economist Thomas Piketty, tax progressivity which is a tool to contain the rise in inequality was progressively reduced. Wage inequality dispersion also increased in many sectors, as privatizations removed government-set pay scales, which were less unequal.
- Lack of skill development and jobless growth.
What is Inclusive Growth?
The Twelfth Five Year Plan of the erstwhile Planning Commission highlighted the desirability towards inclusive growth. The Plan highlights the objectives of inclusive growth as the following: “Inclusive growth should result in lower incidence of poverty, broad-based and significant improvement in health outcomes, universal access for children to school, increased access to higher education and improved standards of education, including skill development. It should also be reflected in better opportunities for both wage employment and livelihood, and an improvement in the provision of basic amenities like water, electricity, roads, sanitation, and housing. Particular attention needs to be paid to the needs of the SC/ST and OBC population” (Planning Commission 2011).
Need for Inclusive Growth in India
Inclusive growth as mentioned above is necessary for the sustainable and holistic development of all sections of the society. For economic, social and political empowerment of its citizens, Inclusive growth is indispensable to India.
The following highlight the need for India to focus more on inclusive growth:
- India is the 7th major country by area and 2nd by population. Yet, India is far away from development while our neighbour China is advancing at a faster rate to become the largest economy of the world.
- Poverty in India is at 22% according to the Tendulkar committee report.
- Low agriculture growth, low-quality employment growth, low human development, rural-urban divides, gender and social inequalities, and regional disparities etc. are the problems for the nation.
- Protests like the recent ones of Jats in Haryana, Patels in Gujarat will only rise if the issues of agriculture productivity, employment growth are not taken care of.
- Labour productivity is very low due to informalisation and poor skill development.
- Access to education and health is not the same for all sections of the population. Females are treated to be subordinate to males and are dependent on their families in all spheres. Inclusive growth is hence the key to women empowerment.
- Regional inequalities are the cause for the rise in distress migration, either intra-state or inter-state. Distress migration further creates problems of housing, accommodation, safety, hygiene, and sanitation.
- Financial Inclusion is the key to transforming the informal economy into the formal economy.
- Corruption is still rampant in the country and prevents inclusive growth.
- Political leadership plays a vital role in growth and development of the country. But implementation of many schemes is poor due to lack of political will.
- The importance of inclusive growth is indisputable for sustainable growth.
- Global warming and climate change affect poor more than the rich. Displaced population further increases distress migration and stress on state’s resources.
- MDG report for India (2015) suggests that out of 18 indicators, India is ‘on-track’ only in four indicators. In the rest of the indicators, India is identified as either ‘off-track’ or ‘moderately on-track’. Achieving Sustainable Development Goals is not possible without concentrating on inclusive growth.
Steps taken by the government for Inclusive Growth
The government has realized the importance of inclusive growth and has taken steps accordingly. Some of the steps taken by the government are:
- Sarva Shiksha Abhiyaan
- Right to Education
- Midday meal scheme
- Housing for All
- Pradhan Mantri Gram Sadak Yojana
- Pradhan Mantri Jan Dhan Yojana
- National Social Assistance Programme
- National Health Mission
- Rashtriya Swasthya Suraksha Yojana
- Pradhan Mantri Jeevan Jyothi Bhima Yojana
- Skill India, Make in India and Digital India
- Right to Information
- Other initiatives like Payment Banks, Small Finance Banks.
As understood from above, Inclusive growth is of vital importance to fight inequality in all aspects and promote holistic development of individuals in the country. Digital technologies like mobile phones, the internet can be harnessed for financial inclusion to address social-economic challenges of the country.