Saturday, January 27, 2007


Indian Economic Inequality

Recently i read that as per the Gini Index, India has lesser inequality than the likes of China, US, Brazil etc. I am not an economist and am willing to accept the verdict at face value. But the armchair-economist in me postutates that rather the inequality itself the unique problem in India is that countless millions receive less than subsistence income. Though income distribution is a study of "spread around the average", if the average itself is very small, then vast swathes will not even earn enough to get by. The lesser problem in India is the relative spread of income
itself, but the fact that millions are below a "subsistence income" and see no hope for the future

A society with a similar income distribution (similar inequality) will have a lesser problem given that a small population is below substince income. If most bellies are full, the danger of anger over income inequality spilling out is lesser, than in a country where majority go home hungry every night. (see figure below)

We all know that everybody needs a minimum subsistence income. Beyond that they need income to have the means to progress, means to equip their children to climb out of the quagmire. They want some semblance of "equality-of-opportunity" for the future if not current equality of income. There is a greater danger in India of growth and globalisation being viewd as 'only for some'. The problem is that those with low incomes also do not have access to decent education (public education is a joke in India) which leads to their childrent being further left behind.

Those who have the means, educate their children and they will do well in an increasingly global economy, thus accentuating the inequality. The simmering-swirling anger in the millions of those untouched by progress is that do even see a way of joining the economic mainstream. Even for their children a genration ahead. And that is certainly an alarming situation. Hence i believe the most important priority in India is reform in the public school system.

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