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Income Inequality in India



  Mar 21, 2024

Income Inequality in India



What does the income share of the top 1% in India indicate?

The income share of the top 1% in India indicates the proportion of national income that goes to the wealthiest 1% of the population. In 2022, this figure stood at 22.6%, highlighting a significant concentration of wealth at the top end of the income distribution. This share is substantially higher than what it was in 1951 (11.5%) and just before India’s economic liberalisation in the 1980s (6%).


How has income inequality changed in India since liberalisation?

Since India’s economic liberalisation in the 1990s, income inequality has increased markedly. The income share of the top 10% skyrocketed, while the shares of the middle 40% and bottom 50% of the population fell. The income gap between the rich and the poor has widened, with the income share of the wealthiest 1% reaching historic peaks.


How does India’s income inequality compare with other countries?

In 2022, the income share of India’s top 1% was higher than that observed in several developed countries, including the United States and the United Kingdom. This indicates a higher level of income concentration at the top in India compared to these nations.


What is the average income of the top 1% compared to the rest of the population?

In 2022-23, the average income of the top 1% in India was approximately ₹53 lakh per year, which is 23 times more than the average income of ₹2.3 lakh for the rest of the population. The bottom 50% and the middle 40% had average incomes of ₹71,000 and ₹1.65 lakh, respectively.


How has the income disparity trended over the decades?

Income disparity has widened significantly over the last few decades, especially after economic liberalisation in the 1990s. The income share of the top 1% and top 10% has increased, while the shares of the middle 40% and bottom 50% have decreased. The trend shows a growing gap between the rich and the poor.


What measures can be taken to address income inequality in India?

Addressing income inequality requires a multi-faceted approach, including:

Implementing progressive taxation to ensure that the wealthy contribute a fairer share.
Enhancing access to quality education and healthcare for all to improve socio-economic mobility.
Strengthening social safety nets and welfare schemes for the economically disadvantaged.
Encouraging inclusive economic growth that benefits all segments of society.
Ensuring fair labor practices and wages.



Why is income inequality a concern?

Income inequality is a concern because it can lead to social, economic, and political instability. High levels of inequality can hinder economic growth, exacerbate poverty and social divisions, and lead to increased crime rates. It can also limit individuals’ opportunities for social mobility, affecting their quality of life and future prospects.


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