The term inequality in the context of the Indian economy refers to the uneven distribution of wealth and income among its citizens. Recent statistics reveal that a striking proportion of national wealth is held by a small fraction of the population, with the top 1% owning over 40% of the total wealth. This situation highlights the pressing need for effective measures to address economic disparity.
Recently, the discourse surrounding inequality was reignited by the Congress party's election manifesto, known as the Nyay Patra. This document underscored the issues of wealth concentration and advocated for strategies aimed at wealth redistribution. The conversation gained momentum through public discussions and comments from political figures, including the Prime Minister.
India's tax system has been criticized for being regressive. It significantly relies on indirect taxes, which account for approximately two-thirds of total tax revenue. These taxes disproportionately affect lower-income individuals. Moreover, even direct taxes lack progression, as smaller companies often endure a higher effective tax rate compared to larger, more profitable corporations.
Welfare and social sector spending in India is relatively low when compared to other nations. For example, public health expenditure is about 1.3% of GDP, falling short of the 2.5% target set for 2025 by the National Health Policy. Areas such as education, rural employment, and child welfare also experience a decline in funding relative to total government expenditure or GDP.
The government proposes to tackle job creation and inequality by enhancing public services in health, education, nutrition, and social security. This strategy aims to generate jobs directly. Improving the quality and conditions of existing jobs, particularly for frontline workers like anganwadi workers and accredited social health activists, is also a priority. Furthermore, the government seeks to bolster support for small and medium enterprises (SMEs) and promote skill training to enhance employment opportunities.
The Congress party's manifesto suggests several initiatives, including the introduction of cash transfer schemes like the Mahalakshmi scheme, designed to provide direct financial assistance to those in need. It also emphasizes increasing public expenditure on social programs, such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Public Distribution System, to strengthen the economic security of lower-income groups.
The government can significantly impact equitable growth by focusing on strategies that enhance the purchasing power of the broader population. This involves investing in human capital, particularly in health and education, and promoting labor-intensive industries to create more employment opportunities. Additionally, policies that encourage women's participation in the workforce and provide essential infrastructure—such as childcare, transportation, and safe housing—are vital for achieving inclusive growth.
Q1. What is economic inequality?
Answer: Economic inequality refers to the unequal distribution of wealth and income among individuals or groups within a society, leading to disparities in living standards and opportunities.
Q2. How does India's tax system affect inequality?
Answer: India's tax system is considered regressive, relying heavily on indirect taxes that disproportionately impact lower-income individuals, exacerbating economic inequality.
Q3. What are the main challenges in welfare spending in India?
Answer: Welfare spending in India is low compared to other countries, with critical areas like health and education receiving insufficient funding, limiting support for vulnerable populations.
Q4. What initiatives does the Congress manifesto propose to reduce inequality?
Answer: The Congress manifesto includes cash transfer schemes and increased public expenditure on social programs to enhance economic security for lower-income groups.
Q5. How can the government promote equitable growth?
Answer: The government can promote equitable growth by investing in health and education, supporting job creation in labor-intensive sectors, and ensuring women's workforce participation through necessary infrastructure.
Question 1: What percentage of wealth is controlled by the top 1% in India?
A) 30%
B) 40%
C) 50%
D) 60%
Correct Answer: B
Question 2: What is a major characteristic of India's tax system?
A) Progressive
B) Regressive
C) Proportional
D) Flat
Correct Answer: B
Question 3: What is the public health spending percentage of GDP in India?
A) 1.3%
B) 2.5%
C) 3.5%
D) 4.0%
Correct Answer: A
Question 4: What does the Mahalakshmi scheme aim to provide?
A) Health services
B) Direct financial support
C) Education resources
D) Infrastructure development
Correct Answer: B
Question 5: Which program is linked to rural employment in India?
A) MGNREGA
B) PMAY
C) Skill India
D) Digital India
Correct Answer: A
Question 6: What sector does the government aim to improve for job creation?
A) Information Technology
B) Labor-intensive industries
C) Financial services
D) Real estate
Correct Answer: B
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