Income Inequality In India

GS Paper – 2 Poverty, Issues Related to Population, Issues Related to Women, Issues Related to Minorities, Human Resource, Inclusive Growth.


  • THE INCOME of 84 per cent of households in the country declined in 2021, but at the same time the number of Indian billionaires grew from 102 to 142, an Oxfam report has said, pointing to a stark income divide worsened by the Covid pandemic.
  • Income inequality is at an all-time high and is growing unabated. 
  • Rising inequality and unemployment are creating ruptures in the fragile fabric of our society. 

The significance of the report– why do we need a research on inequality in the first place?

  • In most democracies, the wealthy can and do convert their economic power into political influence, and consequently, the larger the disparity, the greater the probability that an affluent minority will end up having the ability to determine the destiny of the majority.
  • It is possible that the availability of precise data regarding levels of inequality may aid in the formation of public opinion in favour of policy measures that will assist to ameliorate them.


As defined by the United Nations, inequality is “the state of not being equal, particularly in terms of social position, rights, and opportunities.”

Inequality may be roughly categorised into the following categories:

Inequality in the economy: It is the unequal distribution of wealth and opportunity that exists between people or between various groups in society that is known as economic inequality.

  • If resources in a given society are distributed unevenly on the basis of social norms, then specific patterns along the lines of socially defined categories, such as religion, kinship, prestige, race, caste ethnicity and gender are created.
  • People with different access to resources of power, prestige, and wealth are determined by the social norms of the society in which they live.

Both of these categories are intricately connected, and inequality in one kind has an impact on inequality in the other, as in Women’s income is significantly impacted by social inequalities based on gender. In patriarchal countries, there is a significant income disparity between men and women.

The Oxfam study “Inequality Kills” indicated that while Covid ravaged India, the country’s healthcare budget fell 10% from RE (revised estimates) of 2020-21. The financial allocation for education was slashed by 6%, while the budgetary allocation for social security programmes was reduced from 1.5% to 0.6% of the overall Union budget.

India’s 100 richest persons would have a combined fortune of Rs. 57.3 lakh crore in 2021, according to the worldwide report’s India supplement (USD 775 billion). In the same year, just 6% of the population’s wealth went to the poorest 50%.

“From March 2020 to November 30, 2021, the wealth of Indian billionaires climbed from Rs 23.14 lakh crore (USD 313 billion) to Rs 53.16 lakh crore (USD 313 billion) (USD 719 billion). In 2020, the UN estimates that over half of the world’s new poor will be Indian.

According to the report, India has the third highest number of billionaires in the world, trailing only China and the United States. It has more billionaires than France, Sweden, and Switzerland combined, and the number of billionaires in India is expected to grow by 39 percent by 2021, according to the report.

According to the report, “this increase comes at a time when India’s unemployment rate was as high as 15% in metropolitan areas and the healthcare system was on the verge of collapse.”

Furthermore, according to the Oxfam India briefing, the proportion of indirect taxes in the Union government’s revenues has increased over the previous four years, while the proportion of corporate taxes has decreased over the same period. When comparing the first six months of 2020-21 to the same period the previous year, the extra tax levied on fuel has increased by 33 percent, representing a 79 percent increase over pre-Covid levels. It further claims that the wealth tax “for the super-rich” was repealed in 2016 at the same time as the wealth tax.

“These trends demonstrate that while the poor, marginalised, and middle class paid high taxes despite being hit by a devastating pandemic, the rich made more money without paying their fair share,” the report states. The reduction of corporate taxes from 30 percent to 22 percent in order to attract investment last year resulted in a loss of Rs 1.5 lakh crore, which contributed to an increase in India’s fiscal deficit, the report states.

OOPE (Out-of-Pocket Expenditure) at private hospitals for inpatient care is over six times more than that in public hospitals, and it is two to three times higher for outpatient care, according to data from the National Sample Survey (NSS) (2017-18). The average OOPE in India is 62.67 percent, compared to the world average of 18.12 percent, according to the World Bank.

Moreover, despite the country’s federal structure, the country’s revenue structure maintained the reins of resources in the hands of the federal government, while the management of the epidemic was left to the states, who were not ready to deal with it due to a lack of financial and personnel resources.

Inequalities are addressed using a variety of measures.

  • Article 3 of the Constitutional Guarantee of Equality is enforced in accordance with the Fundamental Rights Declaration. Articles 14, 15, and 16 of the Constitutional Right to Equality are part of a larger system governing that right. Articles 15 and 16 are occurrences of equality protections, while Article 14 gives effect to those protections.

Increasing the visibility of civil society

  • Provide a more powerful voice to historically oppressed and suppressed communities, especially through permitting civil society organisations such as unions and associations with members of these groups, among other things.

Scheduled castes and Scheduled tribes should be encouraged to start their own businesses, and programmes such as Stand up India should be broadened to reach a wider audience by increasing the amount of money available.

Women’s Equality and Empowerment

  • Affirmative action policies such as reserving seats in legislatures, increasing reservation at local self-government levels both at the urban and village levels to 50% in all states, strict implementation of the Equal Remuneration Act, 1976 to close the wage gap, gender-sensitive curricula in schools, raising awareness about women’s rights, changing social norms through programmes such as Beti Bachao Beti Padhao, and other initiatives are needed.

Religious minorities are encouraged to participate.

  • Religious minorities require special consideration, including representation in government positions, the provision of institutional credit, the improvement of their educational access, the protection of their human rights through the empowerment of the National Commission for Minorities, and the strengthening of the rule of law, among other things.
  • Progressive taxes generate additional public resources for public services by increasing the effective taxation on corporations and, more importantly, by broadening the tax base through better monitoring of financial transactions. Progressive taxes on the wealthy generate additional public resources for public services.

Policies in the Economic Field

  • Unequal distribution of resources may be significantly decreased by giving universal access to publicly financed, high-quality services such as public health and education, social security benefits, and employment guarantee programmes.

Creation of New Employment

  • The inability of industrial sectors such as textiles, clothing, vehicles, consumer products, and so on to expand is a significant contributor to growing inequality.
  • Labor-intensive manufacturing has the ability to absorb millions of workers who are leaving the farming industry, but the service sector tends to benefit mostly the urban middle class and lower income groups.


With a goal of achieving the Sustainable Development Goals by 2030 and ending extreme poverty by that year, India has made a commitment to do so.

In the opinion of Oxfam, if India can prevent inequality from growing further, it would be able to eradicate extreme poverty for 90 million people by 2025. If it goes even farther and decreases inequality by 36%, it has the potential to effectively eradicate severe poverty in the world.


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