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INCOME INEQUALITY IN INDIA. MADHURA SWAMINATHAN AND VIKAS RAWAL. There is an impression – both within India and outside – that India is a country of relatively low income inequality.

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INCOME INEQUALITY IN INDIA

MADHURA SWAMINATHAN AND VIKAS RAWAL

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There is an impression – both within India and outside – that India is a country of relatively low income inequality.
  • India’s Gini index more favourable that those of comparable countries like South Africa, Brazil … China, and even the USA, which are otherwise ranked very high in human development.
  • India 36.8
  • South Africa 57.8
  • Brazil 55
  • China 41.5
  • USA 40.8

Source: HDR 2010 cited in Economic Survey 2010-2011

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Income versus expenditure inequality
  • Comparing non-comparables, like tea and rice
  • Inequality in expenditure less than inequality in incomes
  • Savings of rich households
  • Expenditure of poor households (dis-saving)
  • Levels versus trends
income data from ncaer
INCOME DATA FROM NCAER
  • National Council for Applied Economic Research (NCAER)
  • 1993: covered 16 States and 35,130 households
  • 2005: covered all States and 26,734 rural households and 14,820 urban households
  • Estimates of income inaccurate
  • Aggregated (recall problems)
  • Non-standardised questions
  • Consistency across households
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Gini for rural incomes was 0.46 in 1993-94 and 0.50 in 2004-05 (Azam and Shariff 2009)
  • Gini for rural incomes was 0.54 in 2004-05 (Vanneman and Dubey 2010)
methodology
Methodology
  • Income includes all cash and kind incomes.
  • All incomes are net of costs incurred by the households in the process of production and income generation.
  • The surveys used a comprehensive definition of incomes, and included detailed modules on incomes from crop cultivation, from animal husbandry and from wage labour, as well as from salaried employment, non-agricultural self-employment, rent and other transfers.
  • A total of 20 sources of income were used to construct the final income variable.
  • Survey years: 2005-06 (5 villages) and 2006-07 (3 villages)
  • All incomes at 2005-06 prices
table 4 gini coefficients of per capita income by village in per cent
Table 4 Gini coefficients of per capita income, by village (in per cent)

Note. These are adjusted Gini coefficients, following Chen, Tsaur and Rhai (1982).

There were substantial variations across villages, although the common feature of the three villages with higher than average inequality was that they were canal-irrigated villages.

table 5 gini coefficients of per capita income selected countries
Table 5 Gini coefficients of per capita income, selected countries

Palma (2006) and *from ESCAP Yearbook 2009.

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Figure 1. Kernel density plots of per capita incomes for persons belonging to Dalit and Other households, Ananthavaram, Andhra Pradesh
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Figure 2. Kernel density plots of per capita incomes for persons belonging to Dalit and Other households, Bukkacherla, Andhra Pradesh
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Figure 3. Kernel density plots of per capita incomes for persons belonging to Dalit and Other households, 25 F Gulabewala, Rajasthan