Income Inequality

The article “Factors Contributing to Income Inequalities among Agricultural Households in India” by Seema Bathla and Anjani Kumar (EPW, 25 May 2019) aims to estimate income inequality in agricultural households at a subnational level that “can help to evaluate how public policies may lessen income gaps within each state” (p 57). The authors have made the use of the Gini index and regression-based inequality decomposition method within the neoclassical framework along with the Cobb–Douglas production function. The main finding is that “each state shows a high Gini ratio (more than 0.50) irrespective of farm size, indicating the persistence of large income inequalities in India” (p 60). The authors deserve appreciation for their policy influential study in particular to income inequalities in agriculture.

The authors have succeeded in identifying the differing patterns of income inequality among the agricultural households across different geographical regions. Here, an attempt is made to explore some missing links which are important in arriving at the appropriate policy measures. In explaining the income inequality trends and its dynamics in different states there are certain inconsistencies that have arisen; to illustrate, in Chhattisgarh the per capita income of agricultural households has grown, yet land is a source of inequality. Similarly, the explanations for the widened income inequality among the states of Andhra Pradesh, Bihar, Jammu and Kashmir, Karnataka, Kerala, and West Bengal remain insufficient, although it was found that “land is a constraining factor” (p 59) in some of these states.