top of page

The brimming Income Inequality

A diverse nation like ours comes with its own distinct set of multidimensional and intersectional inequalities. Variables like health, income, labour, education and household conditions help determine the type and degree of exclusion and capture how people experience poverty in different ways. With both, social and economic factors reinforcing and sometimes, establishing oppressive structures, communities have no way out of the vicious cycle of poverty that they fall into.

Income inequality shows an interesting trend in India. According to a working paper by Lucas Chancel and Thomas Piketty, the top 1% of earners in the country captured less than 21% of total income in the late 1930s. This decreased further to 6% in 1980. This trend has however been reversed in the recent past. According to Oxfam, inequality has been on a steep rise in the last three decades. Any effort to bridge the income gap was undone by the global economic crisis in 2008. India is now among the top 5 countries where the top 1% control the country’s wealth creation.

How do the numbers look?

According to Oxfam,

  • The top 10% of the Indian population holds 77% of the total national wealth, while less than 6% is held by the bottom 50% of the population.

  • While 73% of the wealth generated in 2017 went to the top 1%, more than 670 million people, the poorest of the population, only experienced about a 1% increase in their income.

  • It would take 941 years for a minimum wage worker in rural India to earn what the top-paid executive at a leading Indian garment company earns in a year.

Why should we care?

There is an emphasis on economic growth, as positive economic growth must trickle down to the poor, thereby benefiting all individuals. However, data, time and again suggests that the growth of income of the poor typically lags behind that of the rich. This has been further accentuated by many forms of gender inequalities. With India reporting one of the lowest rates of labour participation among women, and an overall decline in the overall labour force, which was at its lowest in 2020, has contributed to large populations still living in poverty.

Rural entrepreneurship is often seen as a means of alleviating poverty and reducing income inequalities. Nurturing entrepreneurship opportunities among rural communities is not only a means of generating employment opportunities and raising the real income of the people in the rural areas but also contributes to the development of agriculture and other industries. Providing conducive environments for business growth, building human capacities, making them financially literate and providing them with access to affordable credit to set up or grow small business ventures is of utmost importance to usher in a much-needed push to the rural economy. The widening gap between the rich and poor keeps growing worldwide. While external aid can only do so much, the focus should be on creating self-sustaining businesses that not only generate income but also help in the creation of employment.

Want to help strengthen India’s economy and create a more financially inclusive community? Invest in small businesses. Join and make an investment in small farmers, and rural entrepreneurs and earn interest. Make India one step closer to becoming self-reliant.

54 views0 comments


Post: Blog2_Post
bottom of page