Income inequality has increased in both rural and urban areas of India according to the Gini coefficient. The Gini coefficient for rural India increased by 13% and for urban India by 15%, indicating rising disparities in income, expenditure, and savings patterns between rich and poor. Higher-income states and larger cities have significantly higher average incomes compared to their population shares. Factors contributing to rising income inequality in India include unequal distribution of assets, differences in growth rates across states and sectors, and lack of adequate work opportunities for those without assets.

1. INCOME INEQUALITY
Group Members:
SURAJ PATEL 14MBA074
VINESH PATEL 14MBA076
VIVEK PATEL 14MBA078
PAYAL PATEL 14MBA080
MANISH PRAJAPATI 14MBA082
SIDDTHARTH RAJGURU
14MBA084
MANEGERIAL ECONOMICS : MB700.1
22-Mar-16 1
Article topic: Income inequality up both
in rural and urban areas

2. 22-Mar-16
2
INTRODUCTION
 Income inequality is the gap between rich and
poor i.e. is the differences in the distribution
of economic assets (wealth) and income within
or between populations or individuals.
 It is the state of an economy in which the
shares of total income earned by the rich and
poor are highly unequal

3. 22-Mar-16
3
CAUSES OF INCOME INEQUALITY
• Labour market
outcomes
• Globalization
• Technological
changes
TRADE
LIBERALISATION
• Gender pay gap
• Nepotism
• Wealth
concentration
Racial
discrimination
CHANGES IN
TAXATION
• Policy reforms
• More regressive
taxation
• Access to
education

4. 22-Mar-16
4
CAUSES OF INCOME INEQUALITY IN INDIA
1. GROWTH FACTOR
As development proceeds, the
earnings of different groups rise differently.
The incomes of the upper-income and
middle-income groups rise more rapidly
than those of the poor, during the early
stages of growth through which India is
passing at present shift of population from
agriculture which is a slow growing sector
to the modern large industrial sector which
grows more rapidly. Again, there is the
capital-intensive nature of the development
of the modern sector.

5. 22-Mar-16
5
HIGHLY UNEQUAL ASSETS DISTRIBUTION
 Incomes are derived from two main sources, namely, assets like land, cattle,
shares, etc., and labour.
 In India a few own a large chunk of income – earning assets.
 These inequalities enable the few to get incomes in the form of rent, interest and
profit.
 As these assets accumulate and pass on from generation to generation, the
earning capacity of these increases continuously.
 As for rural areas, the ownership pattern of the most important asset, namely,
land, is highly unequal
 Private ownership of property and inheritance laws is mainly responsible for
highly unequal distribution of assets.

6. 22-Mar-16
6
Of the large many at the bottom rung of incomes, a very great proportion lives in the
poor backward states regions, and most of the few at the top live in the high- income
states regions.
This is the geographical facet of income inequalities for the country as a whole.
 Within the states also there are inequalities, perhaps larger in the poorer states.
Both these aspects are the outcome of the different growth rates of the states, with
a few having grown at a fast rate, and many having lagged behind.

7. 22-Mar-16
7
People at the bottom could raise their economic status and to an extent reduce
the distance separating them from those at the top, if they could get work. In
other words, if they did not possess adequate earning assets, they could at least
earn from their labour.

8. 22-Mar-16
8
Income inequality up both in rural and
urban areas
Income inequality has increased in both rural as well as urban areas.
According to Gini co-efficient thee has been increase in income inequality in rural
India by 13% and in Urban India by 15%
India Financial Protection Survey (IFPS) has covered 63.016households in depth
across the country
There was increase in inequality because of
disparity income
expenditure and saving pattern
Urban income data shows that the size of a town/city makes a great difference to
the household income level
Thus income share is double than its population share
In India the income inequality is as follow
STATES URBAN INCOME % OF URBAN
POPULATION
JAIPUR 0.99% 1.05%
LUCKNOW 0.93% 0.83%
CHANDIGARH 7% 0.3%

9. 22-Mar-16
9
What is Gini Co-
efficient
Gini co-efficient is devised by Italin Statistician Corrado Gini in 1990
It is variability measure employed by
o policy maker
o economist
oacademicians
It has value from 0 to 1 with lower co-efficient indicate more equal
distribution of consumption or income
ozero indicates Perfect equalit
o one indicate perfect inequality

10. 22-Mar-16
10
Statistical Data on income inequality of
BRICS COUNTRIES AND USA
Country
Name
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
India
33.3
8
33.9
0
33.6
0
Country
Name
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
China
42.4
8
42.6
3
42.0
6
37.0
1

11. 22-Mar-16
11
Country
Name
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Brazil
57.6
8
57.4
2
56.7
7
55.8
9
55.0
7
54.6
9
52.6
7
Country Name 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Russia 37.14 37.51 42.13 43.71 42.27 39.69

12. 22-Mar-16
12
LEARNINGS
Meaning of Gini co-efficient and for what purpose it is used
Gini co-efficient is used for the calculation of statistical data
i.e Growth Rate,
Population,
Male and Female sex ratio etc

13. 22-Mar-16
13
References
 http://articles.economictimes.indiatimes.com/2008-02-
07/news/27704400_1_gini-coefficient-income-inequality-households
 http://timesofindia.indiatimes.com/india/Indias-income-inequality-
has-doubled-in-20-years/articleshow/11012855.cms
http://data.worldbank.org/indicator/SI.POV.GINI
Link for pdf file http://www.epw.in/commentary/dynamics-income-inequality-india.html
www.slidesshare.com

14. 22-Mar-16
14