The Prime Minister’s Economic Advisory Council (EAC) has released a report on the latest state of inequality in India. This report paints a bleak picture. He said that if the gap in income inequality is not closed, it will be more difficult to achieve the goals of social development and shared prosperity.
inequality in India
In India, people have improved their domestic conditions, access to necessities, water supply and sanitation, but according to the report, the income gap, as well as the poverty and employment situation, need to be significantly improved.
Dr Bibek Debroy, Chairman, of Economic Advisory Council to the Prime Minister (EAC-PM) has stated, “inequality is an emotive issue. It is also an empirical issue since definition and measurement are both contingent on the metric used and data available, including its timeline”. He further adds, “to reduce poverty and enhance employment, since May 2014, Union Government has introduced a variety of measures interpreting inclusion as the provision of basic necessities, measures that have enabled India to withstand the shock of the Covid-19 Pandemic better”. The report is a stock-taking of both inclusion and exclusion and contributes to the policy debates.
10% with a monthly income of 25,000
The report states that the monthly income of ten per cent of the people is Rs. 25,000. In India, with a population of over 1.3 billion, 15% of the population has a monthly income of less than Rs 5,000 or 64 64. The top 1% earn 5 to 7% of the country’s national income. According to the report, the disturbing thing is that the income of this 1% of people is continuously increasing while the income of the lowest level 10% of people is continuously decreasing.
According to India’s National Family and Health Survey, there is a significant difference in income between rural and urban areas. This is a cause for concern as the country’s large population lives in rural areas compared to cities.
The report goes beyond wealth estimates that represent only a partial picture to highlight income distribution estimates for the 2017-18, 2018-19 and 2019-20 periods. Focusing for the first time on income distribution to understand the flow of capital, the report emphasizes that wealth concentration as a measure of inequality does not reveal changes in household purchasing power in India.
Extrapolation of PLFS 2019-20 earnings data has shown that a monthly salary of Rs 25,000 is already in the top 10% of total earned income, pointing towards some levels of income disparity. The top 1% share accounts for 6-7% of total revenue earned, while the top 10% accounts for a third of all revenue earned.
In 2019-20, among the different job categories, the highest percentage was self-employed (45.78%), followed by regular salaried workers (33.5%) and casual workers (20.71%). The proportion of self-employed workers also turns out to be the highest in the lowest income categories. The country’s unemployment rate is 4.8% (2019-20) and the working population rate is 46.8%.
In the area of health infrastructure, there has been considerable improvement in increasing infrastructure capacity with a specific focus on rural areas. Out of a total of 1,72,608 health centers in India in 2005, the total number of health centres in 2020 is 1,85,505. States and Union Territories such as Rajasthan, Gujrat, Maharashtra, Madhya Pradesh, Tamil Nadu, and Chandigarh have significantly increased health centers (comprising sub-centres, primary health centres, and community health centers) between 2005 and 2020.
Results from NFHS-4 (2015-16) and NFHS-5 (2019-21) have shown that 58.6% of women received prenatal care in the first trimester in 2015-16, which increased to 70% in 2019-21. 78% of women received postnatal care from a doctor or nursing assistant within two days of giving birth, and 79.1% of children received postnatal care within two days of giving birth.
What is the average salary in India?
According to a 2022 study, the average annual salary of an employee in India is Rs. But it is much lower than in other countries. For example, the average monthly salary in the United States is 44 4457 and in Russia, it is 48 1348.
Analysts say that due to the low average monthly salary in India, many countries outsource to India for software development and customer service jobs. Many people in India are technically proficient and can speak English, so foreign companies benefit greatly.
According to the report, education and household conditions have greatly improved due to targeted efforts through various social protection schemes, especially in the area of availability of water and sanitation that have improved living standards.
It is emphasized that education and cognitive development since the founding years is a long-term corrective measure of inequality in India. By 2019-20, 95% of schools have functional restrooms on school grounds (95.9% functional restrooms for boys and 96.9% functional restrooms for girls). 80.16% of schools have functional electricity connections with states and Union Territories such as Goa, Tamil Nadu, Chandigarh, Delhi, Dadra and Nagar Haveli and Daman and Diu, Lakshadweep and Puducherry have achieved universal coverage (100%) of functional electrical connections.
The gross enrollment ratio has also increased between 2018-19 and 2019-20 in primary, upper primary, secondary and upper secondary. Regarding the improvement of household conditions, the emphasis on providing access to sanitation and safe drinking water has meant leading a decent life for most households.
According to NFHS-5 (2019-21), 97% of households have access to electricity, 70% have access to improved sanitation, and 96% have access to safe drinking water.