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Question – Even though millions have been lifted out of poverty in recent decades, the rise in inequality may have dire consequences for the society. Explain in the light of recent studies highlighting this increasing trend.
- January 20, 2023
- Posted by: Pallavi Singh
- Category: Blog
Answer :-
According to UNDP’s Global Multidimensional Poverty Index (MPI) 2022, more than 400 million people were lifted out of poverty in India between 2005-06 to 2019-21.The reduction in the poverty levels is a propitious sign, but the worry is the growing income inequality.
According to World Inequality Report, 2022, richest 10 per cent of the country owned 76 per cent of the total wealth, holding 57 per cent of the national income in 2021, while the share of the bottom 50 per cent went down to 13 per cent. The top one per cent held more than one-fifth of the total national income.
Similarly, Oxfam India’s “Survival of the Richest: The India Supplement” reported that the top 1 percent in India now owns more than 40.5 percent of total wealth in 2021 while the bottom 50% of the population (700 million) has around 3 per cent of total wealth.
Causes of rising inequality :-
1) Highly unequal asset distribution and flawed laws of inheritance.
2) Asymmetric quality education and employment opportunities.
3)Tax evasion, corruption and regressive taxes (e.g. high indirect taxes in India).
4) Market monopoly by some large firms.
5) Gender inequality in wages.
Consequences of Inequality :-
1) Citizens can lose confidence in institutions, eroding social cohesion and confidence in the future.
2) High income inequality reduces incentives for quality work, affecting economic growth.
3) Unequal societies have higher crime rates. Reasons may include resentment and hostility amongst the disadvantaged members of the society, competition over scarce jobs or resources, reduced law enforcement spending in low-income areas.
4) The low income household can’t afford high cost healthcare which results from low paid menial work.
5) In an economically unequal society, the society-wide average level of education decreases while the number of educational elites increases.
6) There is a strong relationship between high levels of income inequality and low levels of social mobility, resulting in social stratification.
7) When wealth distribution becomes concentrated in a small number of hands, political power tends to become skewed in favor of that small wealthy group. Inequality breeds poverty, which in turn leads to issues such as poor sanitation and hygiene, indoor
air pollution in poor households.
8) Isolation of poor slum dwellers and their ghettoisation. It further creates difficulties in assimilating and mainstreaming them in the society.
Way Forward :-
These consequences show that rising inequality needs to be tackled on war footing.
1)Successful models from different countries may be adopted. For example, in South Korea, companies have taken upon themselves in providing skills and their upgradation.
2) Extend quality education to all, associated with quality employment generation.
3) Provide quality healthcare facilities, to ensure healthy workers.
4) Ensure effective delivery of basic amenities associated with adequate social security.