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Income Inequality in India

Paper Type: Free Essay Subject: Society
Wordcount: 1423 words Published: 8th Feb 2020

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Passing through many years economist in India of repute join here to opine that despite the so-called Hindu rate of growth of 2% increased to 7% after 1991. India is not so innocent when it comes to income inequality. After conduction many surveys last year it has been proven that India’s top 1% control up to 58% of the country’s total wealth which is estimated to be higher than the global figure around 50%. The estimation of the total expenditure in the Union Budget 2017 had given a review that the wealth of elite group people in India has added up to Rs 20.9 lakh crore and now as the result the top 1% of India’s total population controls up to 73% of the wealth and the rest which comprises the country’s poorest population about 67 crore citizens saw their wealth increase by 1% (Businesstoday.in, 2019).

In this essay, I intend offering my views on the existing inequality in a diversified Indian society, followed by a policy proposal to overcome this menace and move towards a more equitable distribution of economic sources among the Indian populace.

Inequality is defined as fewer slices of shrinking pie guarantees indecent livelihoods which means a need of growing economic wealth between rich and poor groups and, thus, bring them to somewhat closer to their well to do brethren (Basu, 2019). As understanding deeply about inequality in India it firstly proves the ideal of equality (Indian constitution stands for social and economic equality). Secondly the rising imbalance of social inequality. The last but not the least feeding the forces of separatism and promoting separation among different classes socially and economically which lead to harm or both the top 1% and the bottom 50% in equal measure of the income distribution (Anon, 2019).


In a country like India, the main and the most causative agent of income inequality is the economic inequality which is ruining the social and economic development process of the country. It is necessary to implement a policy to combat the ongoing income inequality, estimating the wealth is neither rocket science nor a quantum physics and year after year asset prices and exchange rates bringing about the changes in wealth shares. What is remarkable is that, in a democracy, the top 1% show deep pockets and high shares, while the majority meekly accept destitution (Livemint.com, 2019). Since the economic indicators have suggested that the situation has not improved. Some of the causes attributed to this growing inequality in India by various ‘Think Tanks’ within and without the country are Demonetization of November 2016 which was done by ripping off the old currency notes. There is now a virtual consensus among experts around the world that this was a blunder that had a negative impact on small business, workers and farmers and poor while leaving the rich virtually unaffected.  (The Times of India, 2019).

Figure 1: Distribution of Income shares In India between Top 1% and Bottom 50% 1951-2014

In the above figure 1, it gives us a small overview of income inequality between the rich and poor. Accepting the structure of changes in the economy accompanied with changes in the rate of tax regulation. Since 2000’s there has been a trace of division of income in which the rich 10% maneuverer most of the national income since 2014. This concluded that 16% of the country’s income is in the hand of the rest bottom 50%(Nupur Anand, 2019).


The policy for income inequality in India should be reduced by introducing a solution of distribution of funds collected through various tax reforms from the top 1% of India’s economy and re-allocating those funds to one of the core sectors of the economy (Education), this will result in skill matching and more of skill will help in reducing income inequality among workers. By careful using the inflow of cash via tax reforms from the top 1% and using it towards education, India will have the full potential of the workforce to face the ups and downs of globalization (Anon, 2019).

Figure 2: Choosing feasible income distribution between Top 1% and the Bottom 50%

In the above figure 2 it gives us an overview where the rich are richer than the poor (Between E & R) but if we are at any point taking in consideration of point E which is considered as full equality between the rich and poor there is a good potential of giving income to rich and also allows the poor to have more income in comparison.  Connecting this figure to the income inequality between the top 1% and the bottom 50% of Indian economy India is unable to reach the feasible frontier point E because due to the income inequality persistence between the rich and poor and current status of economy that can be considered above point R which is considered as the allocation of highest pay for the bottom 50% and where the rich are getting much richer by making a small reduction in the income of the poor (Core Project, 2019).

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On comparing countries with the billion-plus population and digging themselves out of poverty China and India are the best examples in this current situation. On the main objective of removing income inequality China has a policy based on low-skill manufacturing for exports and accompanying aggressive investment in infrastructure has shown positive results by raising the living standards of the bottom 50% of the population than India’s new economic policy leading to continuous growing perks of globalization on the road to well-educated elite (Porter and Russell, 2019).



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