PAPER-IV General Studies-III: Technology, Economic Development, Biodiversity, Environment, Security and Disaster Management

Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment; Inclusive Growth and issues arising from it.

In NEWS: The tyranny of inequality (The Hindu);

To be secure or viksit, India’s leaders must listen to those left behind (Indian Express)

Despite India’s rapid economic growth and emergence as the world’s fifth-largest economy, persistent inequality remains a significant challenge. Do you agree with this view ? Give arguments in favor of your answer.

India’s GDP growth has been consistently strong in recent years, making it one of the world’s fastest-growing major economies with an average growth rate of 8% annually. But India is also among the most unequal countries in the world, with the top 10% of the population holding 57% of the total national income.(World Inequality Report 2022).

India’s economic growth:

1. Job Creation: India’s GDP growth has led to a significant increase in employment opportunities.According to the PLFS data, the unemployment rate has shown a general trend of decline in recent years
2. Improved Living Standards: India’s per capita income has increased significantly over the past decade and enabled people to afford better education, healthcare, and housing. 

3. Reduced Poverty: The latest NSSO survey data indicates a poverty rate of below 5%
4. Improved development indicators:Infant mortality and life expectancy have also improved. 

However, the persistence of inequality, despite this economic progress, remains a pressing concern.

Persistence of inequality:

1. Income Disparity: The Gini coefficient, a measure of income inequality, has been steadily increasing in India, indicating a widening gap between the rich and poor.According to NCAER, the Gini coefficient for India increased from 0.32 in 2004-05 to 0.36 in 2019-20.
2. Regional Disparities: States like Kerala and Tamil Nadu exhibit relatively lower levels of inequality compared to states like Bihar and Uttar Pradesh, highlighting the regional nature of inequality.
3. Rural-Urban Divide: The gap between rural and urban areas in terms of income and living standards persists.According to NSSO, the average per capita consumption expenditure in urban areas is significantly higher than in rural areas
4. Social Inequality: Caste, religion, and gender continue to perpetuate inequality, limiting opportunities for marginalized groups, as evidenced by the persistence of caste-based discrimination and gender-based violence.
5. Unemployment: According to The India Employment Report,In 2022, the share of unemployed youths in the total unemployed population was 82.9%.
6. Gender Inequality: Women face significant gender-based discrimination in various aspects of life, including education, employment, and property rights. There is a considerable gender gap — women’s LFPR (32.8%) in 2022 was 2.3 times lower than men’s (77.2%).
7. Tax Burden on Poor: Approximately 64% of the total goods and services tax (GST) in the country came from the bottom 50% of the population, while only 4% came from the top 10%.
8. Expanding informal sector: According toThe India Employment Report 2024 ,almost 82% of the workforce is engaged in the informal sector, and nearly 90% is informally employed

• often lack access to social security benefits such as pension, health insurance, and maternity leave.

• Low Wages: Workers in the informal sector typically earn lower wages compared to their counterparts in the formal sector.This contributes to income inequality and poverty.
• Vulnerability to Exploitation: Workers in the informal sector are often vulnerable to exploitation, including child labor, forced labor, and unsafe working conditions.
• Limited Access to Credit: Businesses in the informal sector often face difficulties in accessing formal credit, limiting their growth potential.

Addressing inequality in India requires a multifaceted approach that targets the root causes and provides opportunities for marginalized groups. 

Steps needed to address the persisting inequality:

1. Economic policy reforms:

• Diversify the Economy: Shift away from a reliance on agriculture and the informal sector towards a more diversified economy, emphasizing manufacturing, services, and technology.
• Support to MSMEs: More support needs to be provided to micro, small and medium-sized enterprises (MSMEs), especially by providing tools such as digitalisation and AI and a cluster-based approach to manufacturing.

2. Implement Progressive Taxation: Introduce progressive taxation measures in India to mitigate income inequality, ensuring that individuals with higher incomes contribute a greater proportion of their earnings towards taxes. 
3. Strengthen Social Safety Nets: Expand and improve social safety net programs such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the National Food Security Act, and the Pradhan Mantri Jan Dhan Yojana.  
4. Vocational Training: Promote vocational training and skill development programs to equip individuals with the skills needed for employment in the formal sector.
5. Affirmative Action: Strengthen affirmative action policies to promote social inclusion and address discrimination based on caste, religion, gender, and disability.

By implementing these measures, India can address the persistent inequality and build a more inclusive and equitable society.

Source: https://www.thehindu.com/opinion/op-ed/the-tyranny-of-inequality/article68542712.ece#:~:text=In%20a%20recent%20study%2C%20Thomas,up%20from%2012.5%25%20in%201980.

https://indianexpress.com/article/opinion/columns/to-be-secure-or-viksit-indias-leaders-must-listen-to-those-left-behind-9522695/