India's income inequality has doubled in 20 years

[Tiger80]

NEW DELHI: Inequality in earnings has doubled in India over the last two decades, making it the worst performer on this count of all emerging economies. The top 10% of wage earners now make 12 times more than the bottom 10%, up from a ratio of six in the 1990s. Moreover, wages are not smoothly spread out even through the middle of the distribution. The top 10% of earners make almost five times more than the median 10%, but this median 10% makes just 0.4 times more than the bottom 10%. "The main driver has been an increase in wage inequality between regular wage earners-contractual employees hired over a period of time," says the Organisation for Economic Cooperation and Development (OECD) in a new report on inequality in the developed world and emerging economies. "By contrast, inequality in the casual wage sector-workers employed on a day-to-day basis-has remained more stable," the report said. South Africa is the only emerging economy with worse earnings inequality, but it has halved this number since the last decade. "The combination of marked spatial divides, persistently high shares of informal sector jobs and disparities in access to education accounts for much of the widespread variation in earnings from work in the EEs," the report said. Wage inequality has driven more general income inequality in the country. India has got more unequal over the last two decades-India's Gini coefficient, the official measure of income inequality, has gone from 0.32 to 0.38, with 0 being the ideal score. In the early 1990s, income inequality in India was close to that of developed countries; however, its performance on inequality has diverged greatly since then, bringing it closer to China on inequality than the developed world. There is evidence of growing concentration of wealth among the elite. The consumption of the top 20% of households grew at almost 3% per year in the 2000s as compared to 2% in the 1990s, while the growth in consumption of the bottom 20% of households remained unchanged at 1% per year. In comparison, the income of the bottom 20% of households in China grew at double the rate in the 2000s as compared to the 1990s, while the increase for the top 20% of households was much slower. In Brazil, household incomes have been growing faster among the poorest households than among the richest for the last two decades. Of all the emerging economies, India has by far the highest proportion of informal employment, by any national or international measure. "In India...informal employment includes a disproportionate number of women, home-based workers, street sellers and workers sub-contracted by firms in the formal sector," the OECD report said. India spends less than 5% of its GDP on social protection schemes as compared to Brazil's more than 15%. Its tax revenue as a proportion of GDP is under 20%-the lowest of all emerging economies, and just half that of developed countries. http://timesofindia.indiatimes.com/india/Indias-income-inequality-has-doubled-in-20-years/articleshow/11012855.cms

[f.b.m]

I'm somewhat skeptical of these top 10% bottom 10% stats because they dont reveal how many of the top 10% remain in the top 10% in the 20 or so years. IIRC there was a similar study in America which made huge statements about how the rich got infinitely richer when in fact only a small fraction of the top 25% remained in the top 25% during their period of study. Also stating household figures is quite misleading especially when comparing India's figures to China's for example since household sizes are decreasing at different rates. Also I dont know if low Gini number by itself is desirable: Otherwise one should prefer India in 1990 over today's India despite massive improvements in GDP, life expectancy, etc. Looks like the people writing this had their conclusions made and were just looking for a few numbers to garnish their opinions.

[Clarke]

Inequality, Indian Style

As we weave through early-morning Delhi traffic on his motorbike, Ravi Gulati gets into a riff about status symbols in India, how from Armani jeans to Audis they are almost all Western, and how his car, a cheap and practical Maruti van that seats eight but won’t win any beauty contests, is a source of derision every time he pulls up at a five-star hotel for some lavish weeklong wedding (although he tries to avoid these occasions) that has cost more than is imaginable to a poor Indian. Gulati, a mild-mannered man in his early 40s, was on the fast track to fortune, an M.B.A. student at a top school, the Indian Institute of Management, when a course he took on Indian agriculture taught by a professor who had walked, like Gandhi, from village to village got him thinking that his country had lost the plot and that an elite gobbling up new condos for $3 million or more had grown blind to the fact that trickle-down was a downright myth. A booming India of rising middle-class fortunes had parted company with a bigger one still mired in distress, and without any real debate India, like much of the world, had embraced Margaret Thatcher’s “There is no such thing as society†as a prevailing idea. Nowhere is inequality — what President Obama this month called “the defining challenge of our time†— more in your face than in India. Brand-filled shopping malls spread. So do shanties. A rich man builds a 27-story house for his family in a nation of 1.2 billion people where more than a quarter of them — or roughly the U.S. population — lives on less than two bucks a day. Outdoor defecation is still widespread. Yet when Gulati, a social activist engaged in teaching poor Delhi kids through a nongovernmental organization called Manzil, tries to interest his peers in the subject of inequality, he tends to find the conversation goes nowhere, drowned by talk of some juicy real-estate deal for farmland south of Delhi, the latest Bollywood hot item numbers, or the Silicon-Valley success story of yet another Indian immigrant. “We are giving aid to America. It’s crazy!†Gulati tells me. “We are sending our finest minds all over the world to help enrich the countries they adopt, but not India, which desperately needs them.†He points to a shanty where “children lie in the mud while their parents look for work.†He gets exercised over the impunity of politicians cutting sweet deals for themselves and walking off with suitcases of cash, the greed-is-good top 1 percent, the lousy infrastructure and inadequate schools, the first-world privatized services for the rich and substandard public service for the rest, the blindness of privilege — and it strikes me that globalization has thrown up the same issues of inequality everywhere as mobile capital outsmarts immobile workers, and mass culture enshrines money as the supreme value, and well-paid lobbyists burrow away in the interests of the cosseted few against any social compact. The debate around these themes in India follows lines you hear around the world, with a rising nationalist right insisting the poor must work harder, that they receive too many entitlements as it is, that deregulation and the animal instincts of the self-made man are the answer, that the left with its handouts (and in India’s case the heavy post-war state planning of Nehru) has failed. While, from the other side, voices like Gulati’s rise protesting a me-me-me world gone mad; insisting that society does exist; that the social compact is essential and hinges on acknowledgment of the commonweal; that a livable minimum wage is important; that solidarity alone can provide shelter, education, equal opportunity and social protection to the neediest, as well as hope for a future in which income distribution stops heading in a U.S. direction where, as Obama pointed out this month, the average C.E.O. now makes 273 times the average worker compared to 20 to 30 times in the past. The world needs more Ravi Gulatis. It does not need more Indian businessmen building 27-story homes. When a phrase like “the bottom 90 percent†rolls off the tongue as if this were a normal state of affairs, something is amiss. The common man and woman have been had. Gulati’s motorbike is 15 years old. It goes. Internal beauty trumps external show — surely an Indian idea even if not the prevailing ethos. Gulati rows against the tide. In the words of Harsh Mander, a social worker and writer he admires, a hyper-connected India has “exiled the poor from our conscience and consciousness.†It learned some of that trick from America. The winds are shifting but, as Bill de Blasio will discover, the invisible forces driving increasing inequality are implacable, from New Delhi to New York. Policy change can help, but the real change, as with Gulati’s epiphany, must come from within each of us.

http://www.nytimes.com/2013/12/20/opinion/cohen-inequality-indian-style.html?hp&rref=opinion/international&_r=0