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The novel coronavirus pandemic had exposed the precariousness of lives of the common people and the emerging universal truth is that economic inequality is rising sharply in all countries.


GS-III: Indian Economy (Economic Growth and Development, Planning usage and Mobilisation of resources, Inclusive growth and issues therein)

Mains Questions:

Any new architecture of economic growth required to create better lives for the majority after the pandemic, needs to begin from the ground-level. Discuss. (10 Marks)

Dimensions of the Article:

  1. Global indices
  2. Inequality in India exposed by the pandemic
  3. Challenges compounding inequality in India
  4. Ideas for new framework

Global indices

The World Happiness Report:

  • Released by: United Nations Sustainable Development Solutions Network
  • India’s rank: 144 out of 153. The first five ranks go to Finland, Denmark, Switzerland, Iceland and Norway, respectively.
  • Criteria: well-being; positive emotions; supplemental life; circumstances and social environment; inequalities; unemployment; low incomes; discrimination; GDP per capita; life expectancy; freedom; generosity and absence of corruption.

Global Hunger Index (GHI) 2020:

  • Released by: Welthungerhilfe (Germany based) and Concern Worldwide (Irish NGO)
  • India’s rank: 94th out of the 107 countries. India is ranked lower than neighbours such as Bangladesh (75) and Pakistan (88).
  • Criteria: undernourished as a percentage of the population, child wasting, child stunting, child mortality

Oxfam – Commitment to Reducing Inequality (CRI) Index 2020

  • India was ranked 129 among 158 countries overall, in the 2020 Commitment to Reducing Inequality (CRI) Index.
  • As per the index, India is among the world’s worst-performing countries in tackling inequality going into the pandemic.
  • India’s health budget is the world’s fourth-lowest and only half of the population has access to even the most basic healthcare services, and more than 70% of health spending is being met by people themselves, one of the highest levels in the world.

Inequality in India exposed by the pandemic

  • India’s top 10% of the population holds 74.3% of the total national wealth of India’s richest 1% of the population hold 42.5% of national wealth while the bottom 50%, the majority of the population, owns a mere 2.8%
  • Wealth inequality in India is rising with the Gini wealth coefficient having risen to 83.2% in 2019 from 81.2% in 2008.
  • In India, one of the most distinctive forms of social inequity come within the spheres of gender and caste, where, people coming from the marginalized sections of these social categories, are directly impacted in terms of their opportunities, access to livelihood, education and health facilities.

Challenges compounding inequality in India

  1. Poverty: Despite lifting 271 million people out of poverty between 2005-15, India still remains home to 28 per cent of the world’s poor, as per the Human Development Report. Though severe poverty is less, vulnerability towards poverty is quite high.
  2. Smaller Incomes: While unemployment is under control in India, smaller incomes have resulted in a higher dominance of working poor, lower share of skilled workforce and lack of old-age security.
  3. Education: In terms of Education, inequality in India is more than that in the South Asian region and the world. Indian girls attend school for a shorter period than the regional average.

Ideas for new framework

  • India urgently needs a new strategy for growth, founded on new pillars, such as broader progress measures.
  • GDP does not account for vital environmental and social conditions that contribute to human well-being and the sustainability of the planet and these factors are ignored as externalities by economists.
  • The analysis of sources of well-being leads to the conclusion that the universal solution for improving well-being is for local communities to work together to find their own solutions within their countries, and in their villages and towns.
  • The central idea of the inclusive growth includes sharing of fruits of socio-economic development with all sections of the society. As a result, moving towards inclusive growth directly ensures both equality and equity in the long-term growth.
  • Until the incomes of all rise, India will be a poor country from the perspective of the majority of its citizens, no matter how large its GDP, therefore, Indian economy must grow to create more incomes for its billion-plus citizens.
  • Governments must adopt strong anti-inequality policies on public services, tax and labour rights, to significantly reduce the gap between rich and poor. Governments, international institutions and other stakeholders should work together to rapidly improve data on inequality and related policies, and to accurately and regularly monitor progress in reducing inequality.

-Source: The Hindu

April 2024