Income Inequality

Utilising unit-level data from the India Human Development Surveys, income inequalities in India and in 17 major states for 2004–05 and 2011–12 are estimated. Income inequality was generally high and was rising during the years, notwithstanding some declines in a few states. It is observed that income inequalities among Indians are unlikely to be narrowed down on their own from trickledown effect of income growth.

According to a study by Lucas Chancel and Thomas Piketty (2017), the average annual real per adult income growth in India accelerated from 1.7% during 1951–80 to 3.3% during 1980–2015. However, for the bottom 50% income group, it decelerated from 2.2% to 1.9% over the same period, despite acceleration from 1.2% to 5.1% for the top 10% income group and from 0.2% to 6.6% for the top 1% income group. These growing income inequalities in India are part of a larger set of rising income inequalities in several parts of the world; according to the World Social Report 2020 by the United Nations (2020), two-thirds of the world’s population today lives in countries where income inequality has grown. Moreover, “the ratio between the incomes of the richest and the poorest 10% of global population is 25% larger than it would be in a world without global warming,” as, among other factors, “at similar levels of exposure, people in poverty are more susceptible to damage from climate change than those who are better off” (United Nations 2020: 7).

The Billionaire Raj: A Journey through India’s New Gilded Age by James Crabtree, Noida: Harper Collins, 2018; pp 358 + xxv, `799.

Income and consumption growth rates vary for different income groups. Data shows that beyond the headline gross domestic product growth rate, there is a significant heterogeneity in growth rates depending on which part of the income distribution one is located in.

How have wealth inequalities in child nutrition changed in the major states of India between the last two rounds of the National Family Health Survey? The temporal change in the likelihood of child stunting in the poorest quintile of households vis-à-vis the richer quintiles is examined. Alternative measures of wealth inequality in child nutrition, based on the ranking of the households’ wealth scores (namely the concentration index and the extended concentration index), are also used to see how the magnitudes have changed. The poorly performing states have not only retained the last ranks in terms of average stunting, but have also faltered in the reduction of stunting during the decade under study. In three of these states, the improvement in child stunting has disfavoured the poor by all measures. Comparing the concentration index and the extended concentration index for the two rounds, it is found that inequality in stunting has increased in all the states excluding Uttarakhand. This calls for immediate policy attention, since children from the poorest households in the backward states seem to suffer from the dual burden of the state effect and the class effect.