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World Inequality Report 2022


World Inequality Report 2022 by the World Inequality Lab was released recently, according to which India is now among the most unequal countries in the world.


GS-II: Social Justice and Governance (Issues related to poverty & minorities, Inclusive Growth)

Dimensions of the Article:

  1. Highlights of the World Inequality Report 2022
  2. About the report on increasing inequality in India
  3. Challenges compounding inequality in India
  4. Ideas for new framework

Highlights of the World Inequality Report 2022

  • The poorest half of the global population “barely owns any wealth” possessing just 2% of the total, whereas the richest 10% of the global population own 76% of all wealth.
  • The Middle East and North Africa (MENA) are the most unequal regions in the world, whereas Europe has the lowest inequality levels.
  • Over the past 40 years, countries have become significantly richer, but their governments have become significantly poorer. The currently low wealth of governments has important implications for state capacities to tackle inequality in the future, as well as the key challenges of the 21st century such as climate change.
  • Women’s share of total incomes from work (labour income) was about 30% in 1990 and is less than 35% now.
  • Inequalities within countries are now greater than those observed between countries. At the same time, the gap between the average incomes of the top 10% and the bottom 50% of individuals within countries has almost doubled.
  • There has been a rise of private wealth in emerging countries such as China and India. China has had the largest increase in private wealth in recent decades. The private wealth increase seen in India over this time is also remarkable (up from 290% in 1980 to 560% in 2020).

About the report on increasing inequality in India

  • India stands out as a “poor and very unequal country, with an affluent elite”, where the top 10 per cent holds 57% of the total national income while the bottom 50%’s share is just 13% in 2021.
  • The economic reforms and liberalization adopted by India have mostly benefited the top 1%.
  • Average Household Wealth in India stands at Rs. 983,010. It has been observed that the deregulation and liberalisation policies implemented since the mid-1980s have led to “one of the most extreme increases in income and wealth inequality observed in the world”.
  • The female labour income share in India is equal to 18% which is significantly lower than the average in Asia (21%, excluding China) and this value is one of the lowest in the world.
  • A person in the bottom 50% of the population in India is responsible for, on average, five times fewer emissions than the average person in the bottom 50% in the European Union and 10 times fewer than the average person in the bottom 50% in the US.

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

December 2023