- Oxfam study declared India's richest 1 % hold more than four-times wealth held by bottom 70%
- ranked 76 out of 82 in WEF Global Social mobility index
- State of food security and nutrition in world 2020 report FAO 18% of South Asians (num bering 586 million people) cannot afford the nutrient adequate diet and 58% of South Asians (1,337 million people) cannot afford the healthy diet.
- Social Mobility can be understood as the movement in personal circumstances either “upwards” or “downwards” of an individual in relation to those of their parents.
- ability of a child to experience a better life than their parents
- assessment of the impact of socio-economic background on an individual’s outcomes in life.
- much broader than just looking at income inequality
- measured in reference to a wide range of outcomes—such as health or educational achievement.
- Gap between richest and the rest
- world’s richest 1% have more than twice as much wealth as 6.9 billion people.
- India's richest 1% of the population hold 42.5% of national wealth while the bottom 50% owns a mere 2.8%
- additional 0.5% tax on the wealth of the richest 1% over the next 10 years can create 117 million jobs in education, health and elderly care, etc
- Globally, extreme poverty rates are 4% higher for women than men
- United Nations describes inequality as “the state of not being equal, especially in status, rights and opportunities.
- Economic inequality and social inequality deeply intertwined and inequality in one often affects the inequality in another.
- Economic Inequality
- Income inequality: inequality/disparity in the incomes commanded by the top percentile of the population in comparison to the bottom percentiles,
- Wealth inequality disparities in wealth instead of income
- Social Inequality: distribution of resources in a society based on power, religion, kinship, prestige, race, ethnicity, gender, age, sexual orientation, and class, differentiation of access to social goods in society brought about by these factors.
- Inequality measured with Lorenz Curve and Indices like Gini index, Atkinson’s index, Robin Hood index (Hoover index)
- Inequality in India
- Economic inequality: India is the second-most unequal country globally, with millionaires controlling 54% of its wealth.
- national level, inequality risen in India between 1983–2012, driven by income gaps between India’s states, and a growing urban-rural divide.
- Social inequalities: spheres of gender and caste, where people from the marginalized sections are directly impacted in terms of their opportunities, access to livelihood, education and health facilities.
- Consequences of Inequality
- Slower poverty reduction, though India’s Multidimensional Poverty Index value reduced from 0.283 in 2005-06 to 0.123 in 2015-16, more than 364 million people, continue to experience deprivation in health, education, sanitation and basic services
- Social unrest, as high inequality is likely to undermine democracy, promote corruption and cronyism. The gap between rich and poor is helping to fuel authoritarianism.
- More unequal countries, not only trust is lower and crime rate is higher, these societies are more stressed, less happy and have higher levels of mental illness.
- Extreme inequality inhibits social mobility when children of poor parents will stay poor. inequality in opportunities due to lack of proper education, training in skills, lack of connections and assets
- Urban exclusion- gated communities in form of posh areas on one hand, whereas, around 17 million people live in the slums
- Way ahead
- Policy reorientation
- Progressive taxation to redistribute resources across society.
- Social spending on public services such as education, health and social protection. Evidence of 150 countries – shows that overall, investment in public services and social protection can tackle inequality
- Free up women's time by easing the millions of unpaid hours they spend every day caring for their families and homes. Invest in public services including water, electricity and childcare that reduce the time needed to do unpaid work.
- Low- productivity workers should be incentivized to move to sectors that are more productive, fundamental reforms need to be delivered to increase the productivity of these sectors
- Robust labour protections
- Institutional and policy support for collective bargaining, social safety nets and trade protectionism
- Leveraging technology: as a tool to address poverty and inequality the government must:
- promote technological innovation, use it in agricultural, industrial and services sectors along with creating an encouraging regulatory environment
- promote digital literacy and internet penetration, especially in local languages
- reskilling and better aligning education outcomes with industry needs.
- Government Measures
- Expanding the social security net through Pradhan Mantri Suraksha Bima Yojana (Accident Insurance), Atal Pension Yojana (Unorganized Sector) and Pradhan Mantri Jeevan Jyoti Yojana (Life Insurance)
- Providing institutional support for entrepreneurship with the help of MUDRA Bank, to provide microfinance to entrepreneurs in rural India and a National Hub for SC/ST entrepreneurs has been created.
- Financial inclusion via Prime Mantri Jan Dhan Yojana that strives to ensure that the economically weaker sections have access to bank account
World Bank report on Poverty titled “Poverty and Shared Prosperity 2020: Reversals of Fortune” examines how the COVID19 crisis, compounding the risks posed by armed conflict and climate change, is affecting poverty trends, inclusive growth, and the characteristics of the poor around the world.
- Reversal of extreme poverty trends: Global extreme poverty is expected to rise in 2020 for the first time in over 20 years mainly due to:
- COVID-19 and its associated economic crisis: 2020, between 88 million and 115 million people could fall back into extreme poverty. South Asia will be the hardest hit region, with 49 million additional people pushed into extreme poverty followed by South Africa.
- Armed conflicts: More than 40 percent of the world’s poor now live in conflict-affected countries, Middle East and North Africa extreme poverty rates nearly doubled between 2015 and 2018, spurred by the conflicts in the Syria and Yemen
- Climate change: effects could push between 68 million and 132 million more people into poverty by 2030. poorest are least able to adapt, more vulnerable and less resilient to the impacts of climate change. The impacts of climate change can also raise food prices, worsen people’s health, and increase exposure to disasters.
- Shared Prosperity: During 2012-2017, the growth was inclusive and the incomes of the poorest 40 per cent of the population grew at 2.3% per annum. However, average global shared prosperity may stagnate or even contract over 2019-2021 due to the reduced growth in average incomes as a result of COVID crisis. This may lead to an increase in income inequality, resulting in a world that is less inclusive
- Changing profile of global poor:predominantly rural, young, and undereducated. However, the current COVID crisis is creating millions of “new poor”
- be more urban than the chronic poor
- be more engaged in informal services and manufacturing and less in agriculture.
Way forward suggested by the report
- Policy responses need to reflect the changing profile of the poor: Safety net programs need to reach people in the informal sector in both rural and urban areas
- address hot spots of conflict, climate change and COVID-19.
- Learning lessons from emergency actions taken during COVID and long-term development experiences
- Closing the gap between policy aspiration and attainment: Much more attention needs to be given not just to “getting policies right” but to building the capability of the administrative systems that are tasked with implementing them
- Enhancing and improving data: Data limitations create doubts among the general public, obstruct scientific progress, and hinder the implementation of sound, evidence-based development policies
- Investing in preparedness and prevention: all are affected in the current crisis is an opportunity for leaders to promote a sense of social inclusion and collective resolve, to improve the empirical foundations of policy making, and ensure that governments’ decisions are trusted.
Poverty in India
- India - 364 million poor people (28 percent), out of a global population of the 1.3 billion as per Human Development Index (HDI), 2019.
- 271 million people came out of poverty between 2005-15. Niti Aayog's SDG Index 2019, Indians have fallen back into poverty, hunger and income inequality in the past two years.
- Measures taken for poor during the COVID include package under Pradhan Mantri Garib Kalyan Yojana, cash transfers under PM Kisan scheme, more liberal financing under the Mahatma Gandhi National Rural Employment Guarantee Act, 2005, empowering the poor, labourers, migrants through the Atma Nirbhar bharat scheme etc.
- Poverty estimation by NITI Aayog’s task force through the calculation of poverty line based on the data captured by the National Sample Survey Office under the Ministry of Statistics and Programme Implementation (MoSPI).
- Poverty line estimation in India is based on the consumption expenditure and not on the income levels.