Context:
The Gini coefficient, a criterion of income inequality in India, according to a People Research on India’s Consumer Economy report, has been above the 1950s.
- A consumer economy report can provide information about how consumers feel about the economy, how they spend and save, and how their attitudes can help forecast the economy.
- Income inequality is the uneven distribution of income among a population. It’s also known as the gap between the rich and poor, wealth disparity, or the wealth gap.
- India/GNI per capita
- 10,030 PPP dollars (2023)
Gini Coefficient Analysis:
- The Gini coefficient in India stood at 0.410 in 2023, marking an increase from 0.371 in 1955. The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality), and a higher value indicates greater income inequality.
- This rise in inequality reflects a skewed distribution of income, where the wealth gap has expanded significantly over the decades.
Decline in Share of Bottom 10%:
- The share of households in the bottom 10% of the income distribution has dropped from 3.3% in 1955 to 2.38% in 2023, indicating that the poorest households are experiencing a shrinking share of total income in India.
Pandemic Impact:
- The COVID-19 pandemic exacerbated inequality by disproportionately affecting lower-income groups, while wealthier individuals and businesses were able to recover faster due to better resources and access to digital platforms.
Importance of Inclusive Growth:
- Inclusive growth is the idea of creating a society where everyone has equal access to economic opportunities, and where wealth creation, economic freedom, and equal opportunity can coexist.
- To ensure more equitable growth, investments in education, healthcare, infrastructure, and social safety nets are crucial. These sectors have the potential to improve opportunities for the lower-income groups, helping reduce inequality over the long term.
- A progressive taxation system could also contribute to wealth redistribution, ensuring that those with higher incomes contribute a fairer share to national development.
Widening Gap in Wealth Distribution:
- The rising Gini coefficient highlights the increasing concentration of wealth at the top. India’s growing economic disparity requires targeted measures to ensure that the benefits of growth reach a larger proportion of the population.
People Research on India’s Consumer Economy (PRICE)
PRICE is an independent, not-for-profit research centre, a ‘think tank’ and ‘facts tank‘ engaged in building and disseminating seminal knowledge and insights about India’s Macro Consumer Economy and Citizen’s Environment, for use in formulating public policy and in shaping business strategy.
