INEQUALITY IN INDIA

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🔶 1. WHY IN THE NEWS?

✦ New Labour Codes implemented
✦ Proposal to replace MGNREGA with:

Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) Bill, 2025
✦ Debate over:
Rising inequality
Rural distress
Informal workers’ welfare
Unequal growth pattern

🔶 2. WHAT IS INEQUALITY?

➤ Meaning

Unequal distribution of:

Income
Wealth
Consumption
Opportunities
Assets

🔶 3. TYPES OF INEQUALITY

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║ TYPES ║
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🔹 Income Inequality
→ Difference in earnings

🔹 Wealth Inequality
→ Unequal ownership of assets

🔹 Consumption Inequality
→ Difference in spending power

🔹 Social Inequality
→ Based on caste, gender, religion

🔹 Regional Inequality
→ Difference between states/regions

🔶 4. WHY INDIA USES CONSUMPTION DATA?

➤ Reasons

✅ Large informal sector
✅ Income difficult to measure
✅ Expenditure easier to track

Main Indicator:

⭐ MPCE = Monthly Per Capita Expenditure

$MPCE = \frac{\text{Household Monthly Expenditure}}{\text{Number of Members}}$

🔶 5. GINI INDEX

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║ GINI COEFFICIENT ║
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📌 Measures inequality

$0 \leq Gini\ Index \leq 1$

Value	Meaning
0	Perfect Equality
1	Perfect Inequality

India’s Estimate

🔹 HCES 2023-24 → 0.29
🔹 World Bank → 0.25

⚠ Article says actual inequality may be higher.

🔶 6. MAJOR FINDINGS OF HCES 2023-24

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║ KEY OBSERVATIONS ║
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🔹 Urban India More Unequal

Reasons:

Corporate growth
Service-sector boom
High-income concentration

🔹 Non-food Expenditure Highly Unequal

Includes:

Education
Healthcare
Transport
Housing
Luxury goods

⚠ Rich spend disproportionately more.

🔶 7. URBAN-RURAL GAP

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║ URBAN vs RURAL ║
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Urban Sector

✅ Higher consumption
✅ Better opportunities
✅ More affluent

BUT

❌ More unequal

Rural Sector

❌ Agricultural distress
❌ Lower incomes
❌ Limited services

🔶 8. DECILE ANALYSIS

➤ Meaning of Decile

Population divided into:
⭐ 10 equal groups

Decile	Meaning
1st	Poorest 10%
10th	Richest 10%

🔶 9. IMPORTANT DATA

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║ KEY STATISTICS ║
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Urban India

🔹 Top 10% contributes:
→ 27% of non-food expenditure

🔹 Top decile MPCE:
→ 6× bottom decile

Rural India

🔹 Top decile MPCE:
→ 4.5× bottom decile

Extreme Gap

⭐ Top urban decile MPCE:
→ 9× bottom rural decile

🔶 10. WITHIN vs BETWEEN GROUP INEQUALITY

🔹 Within-group

Difference INSIDE same group

Example:

Inequality among urban middle class

🔹 Between-group

Difference BETWEEN groups

Example:

Urban rich vs rural poor

Important Finding

⚠ Between-group inequality dominates in:

Non-food expenditure

Meaning:
India’s inequality is becoming:
✅ Structural
✅ Class-based

🔶 11. WHY NSSO MAY UNDERESTIMATE INEQUALITY

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║ PROBLEMS IN DATA ║
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🔹 Super-rich avoid surveys
🔹 Hidden wealth
🔹 Underreporting
🔹 Offshore assets

➡ Actual inequality likely much higher.

🔶 12. CLASS-BASED INEQUALITY

According to:

Vamsi Vakulabharanam

Winners Since 1980s

✅ Urban professionals
✅ Corporate owners
✅ Managers
✅ Financial elites

Groups Left Behind

❌ Informal workers
❌ Agricultural labourers
❌ Small farmers
❌ Rural poor

🔶 13. GROWTH–INEQUALITY NEXUS

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║ INDIA’S GROWTH ║
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Growth became:

Urban-centric
Service-led
Capital-intensive

➡ Benefits concentrated among upper classes.

🔶 14. INFORMAL SECTOR PROBLEMS

Features of Informal Jobs

❌ No pension
❌ No insurance
❌ No job security
❌ Low wages

📌 Nearly 90% of workforce is informal.

🔶 15. LABOUR CODE CONCERNS

Critics Say:

❌ Weakens labour protection
❌ Increases insecurity
❌ Favours employers

Government Says:

✅ Simplifies labour laws
✅ Improves business environment

🔶 16. MGNREGA IMPORTANCE

Functions

✅ Rural employment guarantee
✅ Wage support
✅ Reduces migration
✅ Supports rural demand

Concerns About Replacement

⚠ Fear of:

Weakening legal guarantee
Reduced accountability
Greater rural vulnerability

🔶 17. DEBT-LED CONSUMPTION

Meaning

People spend using:

Loans
Borrowing
Credit

Risks

❌ Household debt
❌ Financial insecurity
❌ Economic vulnerability

🔶 18. STRUCTURAL CAUSES OF INEQUALITY

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║ ROOT CAUSES ║
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🔹 Unequal education
🔹 Health inequality
🔹 Asset concentration
🔹 Urban-focused growth
🔹 Informal employment
🔹 Regional imbalance
🔹 Digital divide

🔶 19. POLICY MEASURES

Economic

✅ Rural industrialization
✅ MSME promotion
✅ Employment-intensive growth

Social

✅ Universal healthcare
✅ Better education
✅ Social security

Institutional

✅ Better data collection
✅ Welfare targeting
✅ Labour protection

🔶 20. UPSC RELEVANCE

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║ GS PAPER LINKAGE ║
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GS-I

Urbanization
Rural distress
Social inequality

GS-II

Welfare policies
Labour reforms
Social justice

GS-III

Inclusive growth
Employment
Poverty
Human development

🔶 21. CONCLUSION

⭐ India’s inequality today is:

✅ Structural
✅ Urban-centric
✅ Class-driven
✅ Linked to unequal growth

Thursday, May 7, 2026