The document discusses growing income inequality in India according to a World Inequality Report. It finds that India has high levels of income, wealth, gender, and digital access disparities. Some key causes of inequality include slow economic growth, inadequate digital access especially for low-income households, and a large agricultural workforce with low productivity. Implications of inequality include negative health and social impacts. Proposed next steps to address inequality include a progressive wealth tax, increasing corporate tax rates, and improving government inequality statistics.

1. MBA PROGRAMME 2020-22
MBC 404 INDIAN ECONOMY AND POLICY
ALOKEPARNA CHAKRABORTY
Regd No.: FMS/MBA/2020/22/07
CASE STUDY 1: GROWING UNEQUAL INCOMES IN INDIA: A REALITY
The newest edition of the World Disparity Report highlights rising wealth and
income inequality across countries. In terms of income, the richest 10% of the
world population today receives 52% of global income, while the poorest half of
the population receives only 8.5 percent. When it comes to wealth disparities,
the situation is even worse.
The analysis also predicts a reduction in global income in 2020, with affluent
nations accounting for around half of the drop and low-income and emerging
countries accounting for the other half. This is mostly attributed to the influence
of "South and Southeast Asia, and more specifically" India.
According to the research, India is also one of the poorest performers in terms
of inequality.
This is further confirmed by the fact that the net worth of India's billionaires
increased by 35% during the new coronavirus illness (COVID-19) epidemic, when
India's growth rate was minus 10%.
What are the key findings of the Inequality report?
• India is well-known for being a poor and unequal country with a rich elite.
• While the richest 1% earn 22 percent of total national income, the lowest
50% receive only 13 percent.
• Furthermore, the study reveals significant gender and carbon inequities.
For example, India's female labour income share of 18 percent is one of
the lowest in the world and significantly lower than the Asian average (21
percent, excluding China).

2. • A person in the bottom half of India's population emits five times less
pollution than the average person in the bottom half of the European
Union.
• India's middle class is relatively poor, accounting for only 29.5% of total
national revenue.
• The quality of government-released inequality statistics has drastically
deteriorated, making analysis particularly challenging.
What are the different forms of inequality prevalent in India?
• Income and wealth disparities, as discussed in the World Inequality
Report findings.
• Digital access inequity: According to the National Sample Survey (2017),
just 6% of rural families and 25% of urban families own a computer. Only
17% of persons in rural areas and 42% of those in metropolitan areas
have access to the internet.
• The unequal distribution of money, power, and status is referred to as
social inequality. Social inequality can be seen in terms of gender,
colour, age, ethnicity, religion, and kinship. This form of disparity is
common in India. Upper caste households in India, for example, earned
around 47 percent more than the national average monthly family
income. According to the World Inequality Database, the richest 10% of
these castes owned 60% of the group's wealth in 2012.
What are the causes of India's huge inequality?
• Economic and GDP growth have been slow for some years, which may
help to reduce poverty and inequality. Since the 2008 Global Financial
Crisis, GDP growth has been weak, and it has completely halted since the
beginning of 2017. Increased GDP size is the best long-term and reliable
strategy to alleviating inequality in a relatively destitute country like India.
• Inadequate digital access: Low-income households cannot afford to give
their children with digital access. According to studies conducted by the
Azim Premji Foundation, ASER, and Oxfam, between 27 and 60 percent of
students were unable to access online lessons due to a lack of equipment,
shared devices, or an inability to pay for internet access. Increased
technological penetration and industrialization: Some experts suggest
that because technology is skill biased, those who can use it experience
higher productivity and incomes than their less-skilled competitors.

3. Increased productivity promotes the spread of technology, which raises
the need for trained personnel. This self-perpetuating loop expands
wealth and income disparity.
• Low-productivity sectors employ a sizable share of the labour force. Take
agriculture, for instance. It employs 53% of the workforce while
contributing just 17% to GDP.
• Economic disparity has been worsened by the COVID outbreak.
What are the implications of inequality?
Inequality has a wide range of negative repercussions, including:
• Inequality, according to Professor Pickett and Wilkinson's study, causes a
wide range of health and social difficulties, including shorter life
expectancy and infant mortality, as well as lower educational attainment,
reduced social mobility, and higher levels of violence and mental illness.
• High levels of income inequality are linked to economic uncertainty and
crises, whereas more equal nations enjoy longer periods of consistent
prosperity. In India, the middle class is relatively impoverished,
accounting for only 29.5 percent of total national revenue.
The accuracy of government-released inequality information has worsened
dramatically, making contemporary disparity developments particularly difficult
to analyse.
The quality of government-released inequality information has deteriorated
substantially, making analysis of current disparity developments impossible.
• Disparities in income have a substantial influence on people's health and
well-being. It also adds to a systemic breakdown in trust, solidarity, and
social cohesion, lowering people's motivation to act for the common
good. In India, for example, there is social struggle among social groups,
as seen by the Patidar rebellion and the Jaat Andolan.
• Rising pay disparity reduces productivity.
• Due to present internet access disparity, digital alternatives for providing
important services such as health and education are bound to fail.
• Because low wages result in decreased investment in physical capital and
education, increased inequality may hasten environmental deterioration.

4. What is the next step?
• Imposing a mild progressive wealth tax on multimillionaires. This has the
potential to generate a significant amount of worldwide money. As an
illustration: A global effective wealth tax rate of 1.2 percent on fortunes
above $1 million could generate money equal to 2.1 percent of global
income.
• Increasing the proposed basic minimum tax rate on international
corporations from 15% to 25%. The present business tax rate of 15%
would set off a race among countries to reduce their corporate tax rates
to that level. Each year, India will benefit from a €1.4 billion tax break.
• A excellent place to start for India would be for the government to
improve the quality of statistics on inequality inside the country.
• The government of India must execute a number of measures in order to
decrease inequality. The government must also take use of the additional
time to emphasise skill development: A skill-led economy is required to
properly use India's demographic dividend in the direction of equality.
Case Study 2: Environmental Management in India
Economic Factors Affecting Environmental Sustainability
Lack of Environmental Compliance: A primary reason why natural disasters
result in a substantial number of preventable mortalities is a failure to adhere
to environmental standards. Any activity to objectively assess the danger of
natural disasters to a place is rarely carried out in the proper spirit. Uncontrolled
quarrying and the unscientific cutting of slopes into hills exacerbates the risk of
soil erosion and, as a result, the risk of landslides. Subsidies' Negative Effects:
The government has supplied the majority of subsidies in order to offer welfare
to disadvantaged segments of society. The subsidised character of services such
as energy and electricity, on the other hand, leads to abuse and weakens
environmental sustainability.
Further, subsidies also undermine the revenue base and limit the government’s
capacity to invest in new, cleaner technologies.

5. No Cost to Environmental Resources: Access to natural resources is entirely
open and no individual user bears the full cost of environmental degradation
and resources are consequently overused.
Complexity of Population Dynamics: Increasing population tends to exacerbate
the linkages between underdevelopment and environmental degradation.
Furthermore, poverty creates strong incentives to have big families and
encourages migration, making metropolitan regions environmentally
unsustainable. Both consequences put more strain on resources, worsening
environmental quality, lowering productivity, and reinforcing poverty.
Governmental Initiatives to Tackle Environmental Degradation
While the cooperation of every citizen of the country is essential for
safeguarding the environment, governments have a huge role to play in helping
find solutions to the problems. The government of India has taken various steps
to safeguard the environment. Some of them are listed below:
• Swachh Bharat Mission
• Green Skill Development Programme
• Namami Gange Programme
• Compensatory Afforestation Fund Act (CAMPA)
• National Mission for Green India
• National River Conservation Programme
• Conservation of Natural Resources & Eco-systems
Solutions
Agenda 21 - UNCED's blueprint for sustainable development - gives high priority
to the implementation of “win-win" policies that exploit the complementarity
between poverty reduction, economic efficiency and sound environmental
management.
Following interventions can be taken to implement this vision.
• Feminization of Development: Wide range of investments like expanding
educational opportunities for women and, improving water supply and
sanitation services, may lead to the highest returns for development and the
environment. It will also increase synergies between poverty alleviation and
environmental protection.
• Prudent Economic Policies: Economic policies such as rationalization of price
subsidies, the clarification of property rights, facilitation of technology

6. transfer may help in achieving environmental sustainability. Rationalising
subsidies will save money, improves efficiency and can significantly lower
pollution. Also, open access to environmental resources needs to be replaced
with some ordered system of use or ownership rights. Community ownership
of resources can result in sound environmental stewardship, particularly
where it is based on customary social practices. Incorporating Indigenous
Knowledge: Regions and countries can benefit from the knowledge of
indigenous people and their understanding of large ecosystems. Thus,
Governance, including customary institutions and management systems
should involve indigenous peoples and local communities to safeguard
nature and understand climate change.
• Conserving Biodiversity: The linkage of biodiversity and environmental
sustainability highlights the critical need to integrate biodiversity
considerations in global decision-making.
Conclusion
Development remains the greatest pursuit as well as a challenge, faced by
humanity. However, despite the unprecedented economic and social progress
that has been made over the last century, poverty, famine and environmental
degradation still persist on a global scale.
Moreover, environmental deterioration and climate change have started to
show irrevocable damages to the developmental progress made so far. Thus,
development goals must be pursued without breaching environment
regulations.

7. Case study 3: India’s Unemployment Crisis
In India, a decrease in contract employees resulted in job losses (almost 70,000
laid off in the first half of FY2016 compared to 161,000 hiring in the first half of
FY2015). Contracting is all-too-common, and the solution is as easy as
eliminating the informal nature of labour. Better salary, job stability, safe
working conditions, and benefits will only assist employees in reaching their full
potential. In fact, contract labour is known to trigger batch rejection in
organisations that produce highly specified goods.
Employment in export operations has decreased as a result of declining global
demand.
Only a few new jobs have been generated in the automobile industry. Nokia
shuttered its mobile phone plant in Chennai, laying off 8,000 employees,
because Microsoft, Nokia's new owner, determined that producing
smartphones in China and Vietnam was less expensive. JP Morgan Asset
Management, which operates a mutual fund in India, has followed in the
footsteps of Goldman Sachs and Nomura. Another example is Lafarge, a cement
firm. The emphasis should be on improving "doing business facilitation,"
boosting the investment cycle, supporting job creation through infrastructure
enhancement, finding a way to reduce borrowing rates, and boosting the
investment cycle. As a consequence of significant developments in automation,
robotics, and productivity, which allow more work to be done with fewer
people, the economy is creating fewer jobs per unit of GDP. As a result, a greater
emphasis on labor-intensive industries will result in job creation. While financial
services and e-commerce appear to be obvious hotspots, the importance of new
economy enterprises should not be underestimated.
These might include education, hospitality, and healthcare, as well as
ecologically friendly professions like solar and wind energy.
The MSME industry must quickly reduce sluggish global demand and exports
while also diversifying its export basket. MSMEs account for 40% of India's
manufacturing output and employ 14 million people, therefore expanding their
job opportunities is vital. It is critical, given India's demographic dividend.
Because 54 percent of our population is under the age of 25, we have a huge
workforce. Unfortunately, many of them are out of job since their skills do not
match the needs of the new company. While the curriculum has remained
relatively similar, the manner in which it has been applied has evolved.

8. Automotive, construction, textiles, and retail are some of the industries with the
greatest talent shortages.
Furthermore, qualified professionals in a wide range of vocations, from welders
to bricklayers, and from electricians to nurses, are in short supply.
Industries demand market-oriented competencies to fulfil their corporate goals
of improved production, lower costs, and more efficiency. In addition to
improving its own training facilities, the sector must focus on connecting with
education/training institutes and revising the curriculum, content, and
teaching/training practises. The service sector accounts for 58 percent of India's
GDP, whereas the industrial sector accounts for only 24 percent.
We have ignored the manufacturing sector while focusing on the less job-
creating, less marketable, and less technologically advanced service business.
Automotive, construction, textiles, and retail are some of the industries with the
greatest talent shortages.
Furthermore, qualified professionals in a wide range of vocations, from welders
to bricklayers, and from electricians to nurses, are in short supply.
Industries demand market-oriented competencies to fulfil their corporate goals
of improved production, lower costs, and more efficiency. In addition to
improving its own training facilities, the sector must focus on connecting with
education/training institutes and revising the curriculum, content, and
teaching/training practises. The service sector accounts for 58 percent of India's
GDP, whereas the industrial sector accounts for only 24 percent.
We have ignored the manufacturing sector while focusing on the less job-
creating, less marketable, and less technologically advanced service business. It
is still regarded unusual in India. At the shop, holding a torque wrench and rolling
up your sleeves is considered more respectable than shuffling papers. The
sooner these thinking changes, the better it would be for India. According to the
UNDP Asia-Pacific Human Development Report 2016, India may face severe
employment shortages over the next 35 years. There are two ways to look at it:
as a tremendous tsunami of unemployment and demographic disaster wreaking
havoc on India, or as an enormous wealth-creation resource that, if properly
handled, would overwhelm much of the rest of the globe.