State of Inequality in India Report
🟠 Topic 94: State of Inequality in India Report
📌 Introduction
The State of Inequality in India Report, released in 2022 by the Economic Advisory Council to the Prime Minister (EAC-PM), provides a comprehensive analysis of economic, health, and educational disparities in India. It highlights income gaps, regional inequalities, access to healthcare, and educational outcomes, offering policy recommendations to ensure inclusive and equitable growth.
🔹 What is Inequality?
📖 Definition
Inequality refers to disparities in income, wealth, education, health, and access to opportunities across different sections of society.
Dimensions of Inequality Covered in the Report
| Dimension | Indicators |
|---|---|
| Income Inequality | Wages, consumption, savings |
| Health Inequality | Access to healthcare, life expectancy |
| Education Inequality | Literacy rates, enrolment ratios |
| Household Assets | Housing quality, asset ownership |
| Labour Market | Formal vs informal employment |
🔹 Key Findings – State of Inequality in India Report
1️⃣ Income Inequality
✔️ Top 10% of population earns ~30-35% of total income.
✔️ Bottom 50% holds only ~15% of income share.
✔️ Urban incomes significantly higher than rural incomes.
2️⃣ Regional Disparities
✔️ Southern and Western states have higher per capita incomes than Northern and Eastern states.
✔️ Bihar, UP, Jharkhand have highest poverty rates.
3️⃣ Education Inequality
✔️ Literacy rate improved to 77.7% (NSO 2021), but gender and rural-urban gaps persist.
✔️ Only 10% of rural population has completed higher secondary education, compared to 30% in urban areas.
✔️ SC/ST communities have lower educational attainment than national average.
4️⃣ Health Inequality
✔️ IMR (Infant Mortality Rate): Highest in Bihar, Madhya Pradesh, lowest in Kerala.
✔️ Access to institutional deliveries improved but lags in tribal belts.
✔️ Private health spending contributes over 60% of total health expenditure, impacting poorer households more.
5️⃣ Asset Inequality
✔️ Only 7% of rural households own a computer, compared to 23% urban households.
✔️ LPG penetration improved due to PM Ujjwala Yojana, but some states still rely on solid fuels.
Income Share by Population Group (Graph)
🔹 Causes of Inequality in India
1️⃣ Historical Factors
✔️ Colonial economic structures.
✔️ Caste-based exclusion and social stratification.
2️⃣ Regional Disparities
✔️ Uneven development across states.
✔️ Industrial and services sector concentration in select regions.
3️⃣ Educational Divide
✔️ Quality of schooling, higher education access varies widely.
✔️ Skill gaps limit economic mobility.
4️⃣ Informal Employment
✔️ Over 90% of workforce in informal sector, with: ✔️ Low wages. ✔️ No job security. ✔️ Limited upward mobility.
5️⃣ Wealth Concentration
✔️ Top 1% owns over 40% of national wealth, exacerbating inequality.
6️⃣ Digital Divide
✔️ Limited digital access in rural areas restricts: ✔️ Online education. ✔️ E-commerce participation. ✔️ Access to government services.
🔹 Government Initiatives Addressing Inequality
1️⃣ Direct Benefit Transfer (DBT)
✔️ Ensures targeted delivery of subsidies and welfare benefits.
✔️ Reduces leakages, ensuring better targeting.
2️⃣ PM Garib Kalyan Yojana (PMGKY)
✔️ Free food grains and cash transfers to vulnerable sections during COVID-19.
✔️ Prevented spike in extreme poverty.
3️⃣ National Food Security Act (NFSA)
✔️ Covers 75% rural, 50% urban population.
✔️ Provides subsidised grains, reducing food inequality.
4️⃣ Ayushman Bharat (PM-JAY)
✔️ Provides free health insurance up to ₹5 lakh for poor households.
✔️ Reduced catastrophic health expenditure for vulnerable families.
5️⃣ PM Jan Dhan Yojana (PMJDY)
✔️ Over 50 crore bank accounts opened, enabling: ✔️ Financial inclusion. ✔️ Direct Benefit Transfers. ✔️ Access to credit and insurance.
Case Study – Kerala’s Development Model
- High investment in: ✔️ Education. ✔️ Public health infrastructure.
- Results: ✔️ Low poverty rates. ✔️ High HDI (Human Development Index). ✔️ Better gender equality outcomes.
🔹 Challenges in Reducing Inequality
1️⃣ Structural Barriers
✔️ Caste, gender, and regional exclusions remain deeply embedded.
2️⃣ Informalisation
✔️ Informal jobs with low pay and no security dominate labour markets.
3️⃣ Educational Access
✔️ Quality schooling and skill training remain unaffordable for many.
4️⃣ Wealth Hoarding
✔️ Limited taxation on wealth and inheritance allows wealth concentration.
5️⃣ Health Inequality
✔️ Out-of-pocket expenditure drives millions into poverty annually.
🔹 Way Forward
✔️ Expand universal social protection across formal and informal sectors.
✔️ Strengthen progressive taxation — wealth and inheritance tax.
✔️ Enhance public investment in education and health.
✔️ Promote women’s workforce participation.
✔️ Expand affordable digital access to close digital divide.
📚 Practice MCQs
1️⃣ The State of Inequality in India Report was released by:
✅ Options:
(a) NITI Aayog
(b) Ministry of Finance
(c) Economic Advisory Council to the Prime Minister (EAC-PM)
(d) World Bank
2️⃣ According to the State of Inequality in India Report, which region has the highest per capita income?
✅ Options:
(a) Northern India
(b) Southern India
(c) Eastern India
(d) Central India
3️⃣ Which of the following programs addresses health inequality in India?
✅ Options:
(a) PM-JAY
(b) PM-KISAN
(c) Make in India
(d) Start-up India
