Inequality of income

1. Introduction:
Income distribution refers to the spread of country’s income percentage throughout its
population and yields a ratio between income of the richest in a country to the poorest
when income is not proportionally distributed , it is called income inequality.
In most cases, income inequality plays a big role in the amount of crime. A country has
because, “as the rich get richer and poor get poorer” it promote unhappiness.
A great portion of India's population is a victim of rising monetary deficits, most of
which has crossed well under the poverty threshold while the top 10% of India's population
enjoys 31.1% of country’s income, the lowest 10% suffers with merely 3.6%.
The following data portrays how India’s inequality measures ratio compares to that of
other countries---
COUNTRIES ____________________________________RATIO
1.India--------------------------------------------------------------------8.6
2.United kingdom----------------------------------------------------13.8
3.United states--------------------------------------------------------15.9
4.Austria------------------------------------------------------------------6.9
5.Sinra Leone-----------------------------------------------------------87.2
6.Slovenia----------------------------------------------------------------5.9

2. Meaning Of Inequality Of Income
Inequality of distribution of wealth and income refers to that situation
of an economy in which income of small section of the country is which
larger than the average income of the nation and the income of large
section is much smaller than the average national income.
Indian economy is a mixed economy. Both public and private sectors
operate in it. Main objective of the public sector is, “Economic growth
with social justice.” On the other hand, the objective of the private sector
is to maximize profit. During the period of planning private sector has fully
succeeded in achieving its objectives whereas the public sector has largely
failed. Consequently inequalities of income and wealth have only been
compounded. In this we shall discuss important problems concerning
inequalities of income and wealth in India.

3. Definition Of Income Inequality
The unequal distribution of household or
individual income across the various participants
in an economy. Income inequality is often
presented as the percentage of income to a
percentage of population. For example, a statistic
may indicate that 70% of country’s income is
controlled by 20% of that country’s residents.
It is often association with the idea of
income “fairness.” It is generally considered
“unfair” if the rich have a disproportionally larger
portion of a country’s income compared to their
population.

4. Nature of inequality of income
Indian economy reveals several forms of
economic inequality. It mains forms are as
under:
Inequality of income and consumption.
Inequality of wealth.
Regional inequality.
These forms are explain below:-

5. 1. Inequality of income and consumption:- There is no official organisation in
India to compile data on the personal distribution of income in the country as a
whole is not directly available. Some insight into it is provided by the data on
distribution of consumption. It is due to this reason that the magnitude of the
inequality of income has been estimated from the data regarding the
distribution of consumption and income.
(a) Inequalities of income.
(b) Rural and Urban inequalities.
(c) Inequalities of consumption expenditure.
(d) Population below poverty line (BPL).
2. Inequalities in the distribution of wealth/Assets:- In India, along with
inequality in the distribution of income there also exists inequalities in the
distribution of wealth. It can be estimated on the basis of distribution of land
holdings, Ownership of building property and ownership of shares of
companies.
(a) Distribution of landholdings.
(b) Ownership of Residential Buildings.
(c) Ownership of Shares.

6. 3. Regional Inequality:- Regional inequality refers to inequality of
economic growth and level of per capita income in different states
of the country. Rate of growth and per capita income in some states
of the country namely Goa, Haryana, Maharashtra, Punjab, Gujarat
etc. is relatively very high. On the other hand, in states like Bihar,
Orissa, Madhya Pradesh, U.P., Jharkhand etc. rate of economic
growth and per capita income is relatively very low. If regional
inequality is not controlled, it may endanger the integration for the
nation. Per capita income is consideration to be the best measure
to know regional inequality.
State Per capita income State Per capita income
(high income states) (Rs. P.a.) (low income states) (Rs. P.a.)
Goa 70,112 Bihar 7,875
Haryana 38,832 Uttar Pradesh 13,262
Maharashtra 37,081 Madhya Pradesh 15,647
Punjab 34,929 Jharkhand 17,299
Gujarat 34,157 Orissa 19,066

7. Causes Of Inequality Of Income In India
 Inequality in the Ownership of
land
 Private Ownership of Property in
Urban Areas
 Law of Inheritance
 Inequality of Professional Training
 Inflation
 Credit Policy of Financial
Institutions
 More Burden of Indirect Taxes
 Corruption and Smuggling
 Unemployment
 Tax-Evasion

8. Government Policy To Reduce
Inequalities Of Income And Wealth
 Land Reforms
 Extension of Public Sector
 Encouragement to small-Scale
and Cottage Industries
 Control over Monopolies and
Restrictive Trade Practices
 Employment and Wage
Policies
 Pricing and Distribution
Policies
 Fiscal Policy
 Measures to correct Regional
Imbalances

9. CONCLUSION
We can conclude that inequalities in the distribution of income
and wealth are quite severe in India. The government of India
has been endeavouring to reduce inequalities of wealth and
income in the country. Several measures have been adopted in
this direction but it could not gain much success. Following
measures were suggested by the planning commission to
minimize inequalities of wealth and income:(i) Agriculture land
and urban property should be re-distributed.(ii) Public
enterprises should distribute essential goods at subsidised prices
to low-income consumers.(iii) More credit facilities be made
available to small farmers and cottage and small industries. They
should be provided essential raw materials on priority basis.(iv)
Rural and Urban poor should be organised. It will be easier for
the administration to help them when they are organised.(v)
Minimum employment facilities be provided. Emphasis has also
been laid on the reduction of inequalities in the distribution of
wealth and income during the course of various five plans.