Economic Inequality & Poverty

Meaning of Economic Inequality & Poverty

In India four forms of inequalities are found. Inequality of income, Inequality of consumption expenditure, Inequality of asset holding, and Regional inequality. Inequality of the distribution of wealth and income refers to a situation in which small section of society share large part of nation income whereas large sections of society are devoid of income. There is an unequal distribution of income. Inequality in consumption expenditure refers to a situation in which a large percentage of total consumption expenditure is incurred by a small percentage of population. Inequality of consumption expenditure shows that a large percentage of bottom population has to struggle to survive, whereas a small percentage of top population enjoys a lavish lifestyle. Regional inequality refers to inequality of growth process across various states in the country and different regions with in a single state. Some states or regions are far more prosperous than the others.

Rural and Urban Breakup

In India there are inequalities of income are found in rural and urban areas as well. Per-capita income in rural areas is less than the per capita income in urban areas. However the inequality levels in rural areas are less than the inequality at urban areas.

Causes:

The following few important causes may be pointed out for income in­equality in our country: 

·         Inequality in the ownership of assets

·         Laws of inheritance

·         Cost of professional training

·         Inflation, Unemployment

·         Tax evasion

·         Corruption and smuggling

·       Greater Burden of indirect taxation or regressive tax structure

Government Policy to Reduce Inequalities of Income and Wealth

Ever since independence, Government has been focussed on reduction of inequalities of income and wealth in the country.

1.    Land Reforms

Land reforms have been introduced to remove inequality in the ownership of land. Land in excess of the ceiling limit has been distributed among the tenant farmers, and among the small and marginal holders.

2.    Expansion of Public Sector

 Government pursued a policy of assigning a ‘flagship-role’ to the Public Sector. Many commercial banks were nationalized in 1966-68. However, since 1991, there has been reversal of the government policy. Privatisation has become the centre stage of growth-strategy. This is because public sector has only yielded inefficiency and bankruptcy.

3.    Encouraging Small Scale Industry

The Government is providing support to develop small scale industry.

4.    Monopolies and Restrictive Trade Practices Act

Monopolies and Restrictive Trade Practices Act, 1969 was passed to put a check on concentration of economic power.

5.    Poverty Alleviation Programmes

Government should frame poverty alleviation programmes particularly those which provide gainful employment to the economically weaker section of the society.

6.    Pricing Policies

Government should design the pricing and distribution policies to reduce the inequalities present in the society. Government should provide the basic amenities at lower price to the weaker sections of the society.