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Poverty and Income Inequality in India's Biggest Challenge Research Team | Posted On Tuesday, January 21,2020, 05:13 PM

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Poverty and Income Inequality in India's Biggest Challenge



Poverty is an age-old challenge in India. Poverty clubbed with income inequality makes the situation worse. India’s biggest challenge is not just poverty alleviation, but the eradication of this inequality. According to data, the richest 1% of India holds 53% of the country’s wealth. The top 10% control 76.3% of the total wealth.

The following data from wealth X and Swiss bank UBS will give a better insight. In 2015, the number of billionaires in India was more than those of Switzerland, Hong Kong, and France combined. At the same time, India is one of the poorest countries in the World. How is this possible? Let’s have a detailed look.

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Poverty and Income Inequality in India's Biggest Challenge​

Poverty in India

India is the 7th largest country in the world. It is the second-most populous country after China. The population of India is 1.2 billion. India has witnessed a 10% growth each year, making it one of the largest economies of the World. The GDP of India in US dollars amounts to 1.644 Billion. But, only a small proportion of its population has benefitted from this.

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This is because the majority of the people in India are living in extreme poverty. If you consider the numbers, more than 800 million people In India are considered poor. Lack of employment or job opportunities in villages contributes to the rising poverty in the country. Women and children are the most affected by poverty. They are often deprived of their basic human needs. Poverty impacts the population in many ways. These are:

Malnutrition: India is one of the most malnourished countries in the World.  More than 200 million people have no access to sufficient food. Out of this, 61 million are children.

Child labor: Although there are laws prohibiting child labor in India, up to 12.5 million children between the age of 5 and 14 are working in hazardous conditions according to official figures. This figure shoots up to 65 million children as per aid agencies. These children do not go to school and contribute to the livelihood of their families to survive against the problems of poverty.

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Lack of education: According to UNICEF 25% of children in India have no access to formal education. Lack of education deprives them of good jobs. This further adds to the existing poverty. More than boys, girls are deprived of this facility.

Child marriage: Even with strict laws, girls are married off before the legal age in most regions of the country. Girls who are children themselves become mothers and face a lot of health issues or even die during labor. Poverty hit lower-class parents have the misconception that marrying off girls financially secures their lives.

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HIV/AIDS: Lack of education and lack of awareness have paved the way for the rising number of HIV infected patients in the country. Most of these are children living in slums without proper medication. According to figures, around 22 million Indians are infected by the HIV virus.

Income inequality in India

Inequality serves as a catalyst in this scenario of rising poverty. The rich get richer and the poor get poorer. This further widens the gap between the rich and the poor.

Inequality can be broadly classified into two categories: social inequality and economic inequality. Both have adverse effects on the growth of the economy. Economic inequality focuses on wealth inequality and income inequality. Income is the money received by an individual from all sources. Examples: salary, bonus, rent. Wealth means assets owned by an individual. Example: bonds, stocks, properties.

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Figures clearly project that inequality in income is rising with time. When the country witnessed a rapid rise of billionaires in the last few years, the poorest sections of the society, comprising up to 67 crore citizens, had their wealth rise only by 1%.

This also means the working class is finding it difficult to fund children’s education, enjoy the quality of medical treatment, have proper daily meals, and financially secure their lives. They remain stuck in their respective position without a great life.

Inequality also has a state-level impact. According to studies, the per capita income across states is diverging. This means some states are developing at the expense of others. Policymakers must pay attention to this and take necessary action to propagate development in less developed regions.

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How Indian government can solve this problem?

India is a vast and diverse land. Only nationwide policies and programs can be effective in solving this issue. The government must ensure that attention is paid to each section of society, and consider their views and opinions. A few tips to solve this issue are:

  • Inclusion of women and girls in public benefits: Free health care, education, and other welfare services must be made available to women and girls. Make sure related policies are available not just to the working class or a particular section of society, but to all.
  • Fair taxation rules: When it comes to tax, the rich and the corporations enjoy tax benefits more than the poor and middle class. Redesign tax rules in a fair way, where everyone gets the benefit.
  • Freeing up women’s unpaid working hours: A large proportion of Indian women are homemakers. They spend their lives taking up the role of caretakers. The government must spend on improving public services like water, electricity and child care. This will encourage them to engage in other activities like continuing studies, starting small scale businesses and so on.
  • Consider inclusive growth strategies: While executing growth plans and strategies, consider each section. This will bridge inequality to a large extent.
  • Ensure food security and medical security: Policymakers of respective districts and villages must ensure food and basic medical services are made available to the under privileged. A nationwide policy to ensure the basic needs of every Indian citizen must be formed.

A country can be labeled as a developing or developed one, only when each section of society witnesses it. Parameters like standards of living, literacy level and health of citizens will automatically prosper when the economy prospers in the right way. Having a handful of billionaires is not enough for nationwide success and prosperity. The government at different levels must consider this as an alarming condition and take necessary steps.

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