Income Inequality in India: Causes and Steps Taken So Far

Income inequality has become a major concern, not just for India but for other nations as well. This is because it hinders the growth of the economy by bringing a great divide between the rich and the poor.

What is income inequality?

Income inequality is when a small portion of a country’s population controls the income of the entire nation. This happens because the income levels of the various participants of the economy are poles apart. For instance, it was recently found that India’s richest 1% have 73% of the entire country’s wealth. So, the rich are super-rich, and the poor are super poor.

What are the main factors that cause income inequality?

Unemployment continues to be the biggest reason behind income inequality, especially in India. A large portion of our population is actually skilled but unable to find employment still. It affects the economy of the country as it leads to slow growth overall. It also contributes to poverty which too is a big issue that has to be overcome.

Another major reason for income inequality in India is black money and tax evasion. The rich and influential are able to get away with paying little to no tax at all even though the people with modest earnings have to give away a sizeable portion of their income in taxes.

There are many other factors that contribute to income inequality in India including the plight of the farmers, inflation, and regressive indirect taxes.

What measures have been taken by the government to address the problem of income inequality?

The government is taking as many measures as possible to eliminate the problem of income inequality in the country. For instance, it’s promoting and supporting self-employment to tackle the problem of unemployment. To that end, schemes like Sampoorna Grameen Rozgar Yojana for rural self-employment, Multiplier Grants Scheme and Electronic Development Fund (EDF) Policy for startups, etc. have been launched.

Similarly, many schemes have been launched to curb black money and tax evasion. Examples include the Goods and Services Tax, Benami Property Act, etc.

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