Income inequality in India has been a topic of interest for many years. While the country has experienced economic growth in recent years, the benefits have not been evenly distributed. Many experts argue that this is due to a lack of government policies that address income inequality. One way to address this issue is through progressive taxation, where those with higher incomes are taxed at a higher rate. Another solution is to invest in education and job training programs to help individuals achieve higher-paying jobs. Overall, it is important for India to address income inequality in order to promote economic growth and social stability.

1. ANALYSING INCOME
INEQUALITY IN INDIA
BY : SHRESHTHA VERMA (BA.LLB 1ST YEAR)

2. SYNOPSIS
Factors
Indicators
Consequences
Solutions
Summary
Conclusion
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3. INCOME
INEQUALITY
Income inequality is the uneven
income distribution throughout a
population. The less equal the
distribution of wealth, the higher
income inequality is. It is a state of an
economy in which the shares of total
income earned by rich and poor are
highly unequal.

4. FACTORS
OF INCOME INEQUALITY
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Globalization
Large-scale informal
employment
Unemployment
Tax evasion
Regressive tax
Inflation
Technological changes
Gender gap
Lack of skill
Lack of education
.Regional and Inter-state
disparities.
Rigid social institutions like
Caste.

5. Globalization
o One of the earliest, and most prominent explanations for
the rise of income inequality emphasized the role of
globalization Globalization has led to the offshoring of
many goods and services which has created downward
pressures on the wages of lower skilled workers. 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.
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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.

6. Unemployment
Unemployment is also a major reason for the
low productivity of labour which can push
many into poverty. It is a fact that inequality,
poverty and unemployment are related to each
other. The lack of sufficient employment not
being created in time is the reason why there is
an income gap today between classes.
Tax evasion is an illegal activity in which a
person or entity deliberately avoids paying a
true tax liability. .This leads to undue
concentration of incomes in a few hands.
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Tax Evasion

7. High taxes
Tax rates are responsible for inequality in
the distribution of income and wealth. This
is due to undue concentration of incomes
in a few hands caused by large- scale tax
evasion.
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Technology
The advent of the digital age has placed a higher premium on
the skills needed for non-routine work and reduced the value
placed on lower skilled routine work, as it has enabled
machines to replace jobs that could be routinized.
• A huge proportion of the population is still dependent on
agriculture but the share of agriculture to the total GDP is
falling.

8. Social Factors
Social inequality, in India can be broadly divided into
Caste inequality, Regional inequality and Gender
inequality.
Gender
Gap
The issue of women being
inferior to men has been there
for years. 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.
Caste Discrimination against certain sections of
the society since historic times. This has
affected their choice, opportunity, and
accessibility to education, employment.
They suffer particularly from
discrimination and racism and thus have
less chance to access employment, often
are forced to live in worse physical
environments and have poorer access to
essential services.
REGIONAL AND
INTER STATE
DISPARITIES
A great number of regions, due to lack
of infrastructure, have remained cut
from the market while many others
have had the resources to make use of
and grow economically. Growth has
been different across sectors and
regions. For examples, Green
Revolution has disproportionately
benefitted Western and Southern India
when compared to Eastern India.
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9. INDICATOR OF INCOME INEQUALITY
Kuznets Curve
Kuznets Curve is used to demonstrate
the hypothesis that economic growth
initially leads to greater inequality,
followed later by the reduction of
inequality. The idea was first proposed
by American economist Simon Kuznets.
Lorenz Curve
The Lorenz curve is a way of showing
the distribution of income (or wealth)
within an economy. It was developed by
Max O. Lorenz in 1905 for representing
wealth distribution.
The Lorenz curve shows the cumulative
share of income from different sections
of the population.
Gini Coefficient
The Gini-coefficient is a statistical
measure of inequality that describes
how equal or unequal income or wealth
is distributed among the population of a
country.
It was developed by the Italian
statistician Corrado Gini in 1912.
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10. Graphs
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11. Status of income inequality in India
World Inequality Report 2022
Report
India stands out as a “poor and very unequal country, with an affluent elite”,
where the top 10 per cent holds 57 per cent of the total national income while the
bottom 50 per cent’s share is just 13 per cent in 2021, according to the latest World
Inequality Report 2022..
The average annual national income of the Indian adult population is Rs
2,04,200 in 2021. The bottom 50 per cent earned Rs 53,610, while the top 10
per cent earned over 20 times more (Rs 11,66,520), the report states.
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In India, the top 10% and top 1% hold 57% and 22% of the total national income
respectively while the share of the bottom 50% has gone down to 13%.

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Inequality Kills: India Supplement 2022
When 84 percent of households in the country suffered
a decline in their income in a year marked by
tremendous loss of life and livelihoods, the number of
Indian billionaires grew from 102 to 142, Oxfam India’s
latest briefing ‘Inequality Kills’ has revealed.
RICHEST 98 INDIANS OWN SAME WEALTH AS THE
BOTTOM 55.2 CRORE PEOPLE

14. RECOMMENDATIONS
Oxfam India believes the following measures
should be implemented:
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 Recognize inequality is real and agree to measure it. India needs to track
policy impact better by improving mechanisms for its measurement.
 Redistribute India’s wealth from the super-rich to generate resources for
the majority: It is time for India to reintroduce a wealth tax to generate
much-needed resources to fund the recovery from the pandemic. Tax
compliance by wealthy individuals must also be drastically improved,
instead of imposing indirect taxes on India’s poor and middle class.
 Generate revenue to invest in the education and health of future
generations
 Enact and Enforce Statutory Social Security Provisions for Informal Sector
Workers: While the government is recognizing gig economy workers, it
also needs to focus on laying the legal groundwork of basic social sector
protections for 93 percent of India’s workforce.
 Change the rules and shift the power in the economy and society: It is
time to reverse social and economic policies that have contributed to the
poor development outcomes for India’s marginalised communities. It is
time to reverse privatisation and commercialisation of public services,
address jobless growth and bring back stronger social protection measures
for India’s informal sector workers.

15. Consequences of
income inequality
Income inequality is a problem because it puts power in the
hands of the rich, resulting in little-to-no social or economic
mobility for large portions of the population. It can result in a
higher cost of living for many, increased hardship, and rises
in crime, mental illness, and social unrest.
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16. CONCEQUENSCES
Inequality Stifles Growth
Inequality can work to stifle growth by the decreasing
availability of investments for human capital. A high level
of economic inequality means a higher level of poverty.
Poverty is associated with increased crime and poor public
health, which places burdens on the economy. In the face
of increasing food prices and lower incomes, support for
pro-growth government policies declines.
.
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Economic Inequality Increases
Political Inequality
When wealth distribution becomes concentrated in a small
number of hands, political power tends to become skewed in
favor of that small wealthy group. High-income groups are
able and incentivized to manipulate government in their favor
through both legal processes and through corrupt practices.
Impoverished or working class groups are simultaneously less
able to become educated or participate in the political process
as economic means become increasingly scarce.
Inequality Decreases Education
In an economically unequal society, the society-wide average
level of education decreases while the number of educational
elites increases connection between education and inequality is
unequal societies tend to underinvest in education.

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Inequality Decreases Health
The impoverished members of society are subject to
disproportionate occurrence rates of certain kinds of illnesses.
Access to quality health care and healthy food is sometimes
limited or unavailable for poor individuals. The result of a
substantial poor population, a defining feature of economic
inequality, is a less effective lower-income work force, higher
disease and mortality rates, higher health care costs, and
progressively deepening poverty for afflicted groups.
Inequality Increases Crime
Studies establish a positive relationship between income
inequality and crime disadvantaged members of a society may
be more likely to suffer from resentment and hostility as a
result of their economic position or competition over scarce
jobs or resources, resulting in a higher propensity for criminal
behavior. Increasingly concentrated wealth leads to higher
crime rates in poor areas which are prevalent in economically
unbalanced societies

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Specifically, there are two main areas where changes to policy could boost
economic equality: taxation and social spending.
1.Progressive taxation, where corporations and the richest individuals pay more to the state in order
to redistribute resources across society, is key. The role of taxation in reducing inequality has been
clearly documented in OECD and developing countries. Tax can play a progressive role, or a
regressive one, depending on the policy choices of the government.
2.Social spending, on public services such as education, health and social protection, is also
important. Evidence from more than 150 countries – rich and poor, and spanning over 30 years –
shows that overall, investment in public services and social protection can tackle inequality. Oxfam
has for many years campaigned for free, universal public services.
3.Free up women's time by easing the millions of unpaid hours they spend every day caring for their
families and homes.
4.Invest in public services including water, electricity and childcare that reduce the time needed to
do this unpaid work. Design all public services in a way that works for those with little time to spare.
5.Increase the employment opportunities in the country.

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6.Free high school education and an increased number of functioning health centres.
7.There is a need for Universal Income Support. Economic Survey 2016-17 has suggested replacing all
current cash transfers with universal basic income. The survey wants UBI to replace and not supplement
the existing social welfare, and anti-poverty schemes like MGNREGA, PMJSY etc.
8.Investments in human capital and public goods have significant positive impacts on private-sector
productivity, with estimated rates of return ranging from 15% to upwards of 45%. The enhanced
productivity of human beings or human capital contributes substantially not only towards increasing
labour productivity but also stimulates innovations and creates the ability to absorb new technologies.
9.Measures should be taken to bridge the immense gap that remains in the distribution of wealth among
different levels of society. A 99% one-off windfall tax on the wealth gains of the 10 wealthiest men in
Covid19 alone will generate $ 812 billion.
10.Tax ranging from 1 per cent of wealth owned over $1 million to 3 per cent for global billionaires can
generate 1.6 per cent of global income.

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11.Wealth taxation in unequal societies
12.Eliminate caste discrimination.
13.Policymakers should focus on making technology cheaper and deepening its
penetration.
14.Investing in women: IMF - If women’s participation in the workforce matched men’s,
Japan could grow at 9 per cent per annum and India at 27 per cent. Stop the blame game:
Instead of addressing the actual causes of inequality, we indulge in a blame game.
15.Reduce asset inequality through redistributive land reforms but also through
inheritance taxes, preventing monopoly of control over water, forests and mineral
resources and reducing financial concentration.

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16.Investing in agriculture: As per the World Bank, agriculture can help reduce poverty for 80
per cent of the world’s poor who live in rural areas and work mainly in farming.
17.Create opportunities for youth and disadvantaged communities.
18.Encourage domestic resource mobilization and stimulate public and private sector
development.
19.Support sectoral training, apprenticeships, and earn-while-you-learn programs.
20.Raise the minimum wage and index it to inflation.

23. SUMMARY
o Globalization
o Taxation policy
o Unemployment
o Changing technology
o Gender gap
o Lack of skills
o Regional disparity
o Inflation
CONSEQUENCES
o Poverty
o Economic instability
o Social unrest
o Lack of education
o Poor health
o Debt and inflation
SOLUTIONS
o Progressive reduction in taxes
o Spending on public sector
o Free education increase
employment opportunities
o Invest in social upliftment
o Remove gender gap
o Eliminate caste discrimination
and regional disparities
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INCOME INEQUALITY
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FACTORS

24. CONCLUSION
“We must work together to ensure the equitable
distribution of wealth, opportunity, and power in our
society.”
–NELSON MANDELA
The causes and consequences of income inequality
are multifaceted. There are many proven solutions
that policymakers can enact like restoring higher
levels of labour protections would aid in reversing
the declining trend of labour wage share,
government promotion , tax policy can be
harnessed to redress income inequality etc.
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25. BY:
SHRESHTHAVERMA
BA.LLB. 1ST YEAR
BARKATULLA UNIVERSITY
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26. THANKYOU!
SHRESHTHA VERMA