● Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
● Inclusive growth and issues arising from it.
Q2. Achieving high economic growth and reducing inequality simultaneously can only be achieved with improvements in human development and poverty reduction. Comment.
The World Inequality Lab’s paper on income and wealth inequality in India sheds light on the widening economic disparities within the country. Despite India’s status as the fifth-largest economy globally, its human development indicators rank lower than several neighbouring nations, indicating a failure of economic growth to translate into inclusive development.
Income inequality in India:
● In 2022-23, India’s top 1% received 22.6% of national income, while the top 0.1% earned nearly 10%.
● Wealth distribution is highly skewed, with the top 1% owning 40.1% of wealth, rising since 1961.
● India’s wealth gap tripled between 1961 and 2023, though less extreme than Brazil or South Africa.
● Inequality surged after the 1991 reforms, reversing the declining trend seen until 1980, impacting growth and poverty reduction efforts.
State-wise comparison of inequality:
● States with sustained high growth (over 7% GSDP per year) are advanced in human development, including Kerala, Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, Gujarat, Punjab, and Delhi.
● States with lower Human Development Index rankings, such as Jharkhand, Chhattisgarh, Bihar, Madhya Pradesh, Odisha, Uttar Pradesh, and Rajasthan, recorded growth rates below 5% post-liberalization.
Human development in India:
● India ranks 134 out of 193 countries in the Human Development Report 2023-2024, lower than Sri Lanka, Bhutan, and Bangladesh, despite being the fifth largest economy.
● Economic growth hasn’t translated into human development growth.
● Economic inequality reduces India’s HDR score by 31.1%, indicating the need for comprehensive poverty reduction measures.
Achieving the twin objectives :
● Achieving the twin objectives of robust economic growth and reduced inequality demands a multifaceted approach.
● Prioritising human development through investments in education, healthcare, and social welfare is imperative. States with high growth rates, such as Kerala and Tamil Nadu, have demonstrated the correlation between human development and sustained economic progress.
● Policies must address structural inequalities by promoting equitable distribution of resources and opportunities. Initiatives like land reforms, progressive taxation, and targeted welfare programs can help mitigate disparities and uplift marginalised communities.
● Fostering an environment conducive to job creation and skill development is crucial for inclusive growth. Sustainable employment opportunities enable individuals to escape poverty traps and contribute to economic prosperity.
● Human development should take precedence over economic growth for inclusive growth.
Conclusion: Addressing income and wealth inequality in India requires concerted efforts aimed at holistic development. By prioritising human development, implementing equitable policies, and promoting inclusive growth, India can aspire to achieve both economic prosperity and social justice.
Source The Hindu
https://epaper.thehindu.com/ccidist-ws/th/th_chennai/issues/80475/OPS/G3ECN9IKQ.1+GLHCN9R75.1.html