[Answered] Persisting and increasing inequalities have been a defining feature of our times. Discuss the factors that are behind it and suggest policy alternatives to tackle it.

Introduction: Contextual introduction.
Body: Explain some factors that are behind inequalities. Also, write some measures required to tackle it.
Conclusion: Write a way forward.

Inequality is the unequal distribution of wealth and power, and the inherent social and political norms that keep perpetuating the ideals of development without growth. India stands out as a “poor and very unequal country, with an affluent elite”, where the top 10 percent holds 57 percent of the total national income while the bottom 50 percent’s share is just 13 percent in 2021, according to the World Inequality Report 2022.

Factors that are behind inequalities:

  • Slow economic and GDP growth: since the Global Financial Crisis of 2008 and has completely lost its momentum since the start of 2017. For a relatively poor country such as India, the most durable and dependable way to reduce inequality is to increase the size of GDP.
  • Lack of digital access: Poor households are not able to afford devices to ensure digital access for their children. According to the ASER and Oxfamreport, between 27% and 60% could not access online classes, due to lack of devices, shared devices, inability to buy “data packs”, etc.
  • Increased penetration of technology and industrialization:  creates a higher demand for skilled workers. This self-reinforcing cycle increases wealth and income inequality.
  • Large numbers of the labour force work in sectors with low productivity: e.g. agriculture provides 53 percent jobs, while contributing only 17% to the GDP.
  • Inadequate public infrastructure: Lack of accessibility to primary health care centres, quality public schools, roads, waterways, rural markets, etc.
  • COVID pandemic has also increased the economic inequality further.

Policy alternatives to tackle it:

  • Levying a modest progressive wealth taxon multimillionaires. This can generate a sufficient amount of global income.g. A global effective wealth tax rate of 1.2% for wealth over $1 million, could generate revenues of 2.1% of global income.
  • The government should improve the quality of dataon inequality within the country.
  • Government need to utilize the time to prioritize skill development: A skill-led economy is the need of the hour to completely utilize India’s demographic dividend towards equality.
  • Increasing employment and wages is central to the inclusive growth approach. Investment in infrastructure including construction can create employment.
  • Need to prioritise universal health care and increase spending on health to 2.5%-3.5% of GDP.
  • Support sectoral training, apprenticeships, and earn-while-you-learn programs.

Concerted efforts are required, for ensuring equality. Education and employment along with social security provisions can provide a level playing field in the labour market.

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