InEqual India:Undeveloped India!!!

Income Inequality:
Inequality in earnings has doubled in India over the last two decades, making it the worst performer on this count of all emerging economies. The top 10% of wage earners now make 12 times more than the bottom 10%, up from a ratio of six in the 1990s.

Moreover, wages are not smoothly spread out even through the middle of the distribution. The top 10% of earners make almost five times more than the median 10%, but this median 10% makes just 0.4 times more than the bottom 10%.

"The main driver has been an increase in wage inequality between regular wage earners-contractual employees hired over a period of time," says the Organization for Economic Cooperation and Development (OECD) in a new report on inequality in the developed world and emerging economies. "By contrast, inequality in the casual wage sector-workers employed on a day-to-day basis-has remained more stable," the report said.

South Africa is the only emerging economy with worse earnings inequality, but it has halved this number since the last decade. "The combination of marked spatial divides, persistently high shares of informal sector jobs and disparities in access to education accounts for much of the widespread variation in earnings from work in the EEs," the report said.

Wage inequality has driven more general income inequality in the country. India has got more unequal over the last two decades-India's Gini coefficient, the official measure of income inequality, has gone from 0.32 to 0.38, with 0 being the ideal score. In the early 1990s, income inequality in India was close to that of developed countries; however, its performance on inequality has diverged greatly since then, bringing it closer to China on inequality than the developed world.

There is evidence of growing concentration of wealth among the elite. The consumption of the top 20% of households grew at almost 3% per year in the 2000s as compared to 2% in the 1990s, while the growth in consumption of the bottom 20% of households remained unchanged at 1% per year.

In comparison, the income of the bottom 20% of households in China grew at double the rate in the 2000s as compared to the 1990s, while the increase for the top 20% of households was much slower. In Brazil, household incomes have been growing faster among the poorest households than among the richest for the last two decades.

Of all the emerging economies, India has by far the highest proportion of informal employment, by any national or international measure. "In India...informal employment includes a disproportionate number of women, home-based workers, street sellers and workers sub-contracted by firms in the formal sector," the OECD report said.

India spends less than 5% of its GDP on social protection schemes as compared to Brazil's more than 15%. Its tax revenue as a proportion of GDP is under 20%-the lowest of all emerging economies, and just half that of developed countries.

Food/Social Inequality:

It’s the grim statistic that just won’t budge: new child malnutrition numbers are out for India, and there is no good news to be had.The exhaustive door-to-door survey covered a fifth of India’s children and found that 42.3 per cent of children under the age of five are underweight for their age, 58.8 per cent are stunted and 11.4 per cent are so severely underfed as to be considered “wasted.”

These figures are significant in part because some Indian nationalists reject the findings of international organizations that have warned that the child malnutrition situation is not improving even as the economy has grown at nearly 10 per cent per year over the last decade.

In fact, about as many Indian children are malnourished now as were at the beginning of the economic liberalization period two decades ago: the number has declined at best by two or three per cent.

One person who has refused to let the malnutrition figures get lost in the gloss of “India Shining” is Prime Minister Manmohan Singh, who chose to personally release this report and called the figures “a national shame,” saying “despite impressive growth in our GDP, the level of undernutrition in the country is unacceptably high.”

Prime Minister Singh noted that the policy tools employed by government to date have not had the impact envisioned. The report findings suggest that the persistent problems of sclerotic bureaucracy and corruption continue to hamper those policy initiatives – for example, almost every village surveyed had an anganwadi community health centre. But while these are supposed to distribute dried rations to children in need, and feed those children cooked meals once a day, only half of the centres actually had the food supplies they were supposed to receive.

As the Globe reported in 2009, the reasons why India continues to have such high malnutrition rates have less to do with levels of poverty than they do with persistent social inequality, particularly between men and women.

The reason, according to research from the International Food Policy Research Institute, that many much poorer African nations nevertheless have better-nourished children than India does is that in those African states, women have much more autonomy in terms of personal mobility, work and household spending, and as a consequence, their children eat better. A child under five is almost twice as likely to be underweight in India as is a child in sub-Saharan Africa.

This survey also drew out the explicit connections between malnutrition and other aspects of development such as education and sanitation. It found that while nearly half of children of illiterate mothers are malnourished, only a third of children of mothers who had 10 or more years of education are.

The survey compared households in the best-performing districts of the most developed states with the worst districts in the poorest states; in the best districts, half of all mothers said their family members washed their hands with soap after they used the toilet, while only a fifth of mothers in the worst districts said they did so – even though almost all households said they had soap. Chronic diarrheal disease is a key cause of malnutrition.

India’s beleaguered central government took another hit this week with the release of a major report that found that inequality in earnings has worsened sharply in the country over the past 20 years, and is worst here of any emerging economy.

The report, called “Divided We Stand,” was researched by the Organization for Economic Cooperation and Development. Most of the attention it received in the West was for its blunt statements on rising income gaps in the United Kingdom and elsewhere in Europe.

But it had grim news to share about India, and its findings are being read here as an indictment of the Indian National Congress-led government, in power for the last seven-and-a-half-years, which has had an overt focus on social welfare schemes and ending poverty – but apparently little to show for it.
The report says that the top 10 per cent of Indian wage earners now make 12 times more than the bottom 10 per cent, up from a ratio of six times more in the 1990s. And while much is made here of the “emerging middle class,” the report holds statistics that put hard numbers to what being a middle-income earner really means: The top 10 per cent of earners make almost five times more than the median 10 per cent; the median earns just 0.4 times more than the bottom 10 per cent.

The report laid much of the blame for the growing wage gap on the fact that a huge portion of India’s workforce – as much as 90 per cent by some estimates – continues to be employed in the informal sector. It also cited unequal access to formal education.

A further problem, the OECD said, is systematic problems with tax collection. India’s tax revenue as a proportion of GDP is less than 20 per cent, the lowest rate of any emerging economy and half of that of developed countries.

The Congress-led government has introduced signature social welfare legislation, including the U.S.$7- billion National Rural Employment Guarantee Act, which gives the rural poor 100 days a year of work at $2 a day. It is the largest public works scheme in the world. Nevertheless, India spends less than five per cent of its GDP on social protection schemes, the OECD says.And those, the report suggests, work: Brazil, in contrast, spends more than 15 per cent of its GDP on social welfare – and in Brazil, household incomes have been growing faster among the poorest households than among the richest for the last two decades. South Africa – another country with a hefty public welfare budget as a share of GDP – is the only emerging economy to post worse earnings inequality than India. But in sharp contrast to India, South Africa halved this number since the last decade.

The report notes evidence of growing concentration of wealth among the Indian elite, saying consumption by the top 20 per cent of households grew at almost three per cent per year in the past decade, while the growth in consumption of the bottom 20 per cent of households remained unchanged at 1 per cent per year.

The proof of a widening gulf will come as a surprise to few Indians, but the report’s findings on poverty were disputed by government: the OECD says 42 per cent of Indians live below the poverty line, while government says the figure is 37 per cent and falling.

Just who is “poor” is a contentious topic here: new government guidelines say an individual income of 25 rupees (52 U.S. cents) a day gives a person adequate “private expenditure on food, education and health” in villages, while a city dweller needs 32 rupees a day (66 U.S. cents). A chorus of critics – from the opposition to a coalition of organizations working with the poor – have derided those figures, and said the government is merely seeking a way to rejig figures so that it appears that there are fewer poor people.

Using its own benchmark, the World Bank says that 42 per cent of India’s 1.21 billion people live on less than $1.25 a day, and that pervasive corruption and mismanagement are undermining anti-poverty schemes.


MultiDimensional Poverty Index(un report)-55%(669million Indian's)
Global Hunger Index-India 45th 
International Poverty Line-73% Indian's


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