Inequality no doubt has fallen over the last decade, but inequality among the top income earners seems to have fallen far more than when we consider the population as a whole.
Rahul Menon, Associate Professor, Jindal School of Government and Public Policy, O.P. Jindal Global University, Sonipat, Haryana, India.
According to a recent report by the State Bank of India (SBI), India has witnessed a significant fall in inequality over the last decade.
Examining taxpayer data, the report claims that the Gini coefficient — a standard measure of inequality that ranges from 0, indicating perfect equality, to 1, indicating perfect inequality — has fallen from 0.472 in 2014-15 to 0.402 in 2022-23. A fall of almost 15% in the Gini coefficient indicates a significant reduction in inequality.
There are, however, some problems. For one, the analysis is conducted on taxpayer data, and a majority of income-earners fall outside the tax net. According to data from the 2022-23 Periodic Labour Force Survey (PLFS), nearly 80% of income-earners earn less than ₹2.5 lakh per annum — the minimum taxable amount.
Using data from the 2017-18 and 2022-23 rounds of the PLFS (comprising the earliest and latest rounds of the survey), this article examines the changes in income inequality amongst all income earners in India, and disaggregates it according to the nature of employment, that is among the self-employed, regular wage and casual wage workers. This analysis reveals that the finding of a reduction in inequality, while broadly true, needs to be qualified in important ways.
Published in: The Hindu
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