The truth about inequality in India

The truth about inequality in India

Article

1.The writer notes that it is impossible to know about inequality in India as the income and wealth data of the well-off people are far from reliable

Important analysis:

  1. The publication of James Crabtree’s book The Billionaire Raj and last year the research paper by Luke Chancel and Thomas Piketty ‘Indian Income Inequality, 1922-2015: From British Raj to Billionaire Raj’ both highlighted the economic inequality in India.
  2. Economic inequality is rising because of the rise of super-wealthy class.
  3. There are intellectuals like Montek Singh Ahluwalia, Jagdish Bhagwati, etc. who denied this, citing two reasons:
  • First, they argued that,  rather than inequality look at other parameters like poverty, satisfaction surveys,  etc.
  • Second, they questioned the methodology of these surveys on inequality.
  1. There are no government data on income and wealth.
  2. Tax data gives some information but the data is prone to understatement.
  3. They argued the main reason that we do not know the true level of inequality is that the income of wealthy people is unreadable.

Limitations in getting true picture of inequality

  1. Government of India does not collect income data. It collects expenditure data. That is, not how much people earn, but how much they spend.
  2. For income, the only reliable data is data collected by India Human Development Survey (IHDS). In the IHDS 2004-05 survey, the individual with the highest income out of 43,000 families earned less than Rs. 22 lakh per year. It shows the loopholes in the data.
  3. The All India Debt and Investment Survey (AIDIS) of the NSSO gives the wealth data. There is question mark on their methodology too.
  4. The writer added that a nation that appears to care much for economic and social inequality, needs to work hard to find out how much inequality there is.
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