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India's massive income gap needs to be tackleed

07-01-2010 20:25 BJT

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Even as India charts its journey of rapid growth and development, one of its biggest hurdles is its massive income gap. Economists say the only way to tackle the problem is inclusive development. It's something that has been on Indian government's agenda for the last five years, but to little effect. In our special series on income distribution…our India correspondent Shweta Bajaj has this story.

For a nation to be large in size brings strengths but also it has its share of weaknesses. India is no different. Far flung areas, large population and difficult terrain makes matters even more complex. India is one nation bearing the brunt of all this. Scattered development and industrialization means income gaps that are not only massive but also widening.

Anjan Roy, Economist, said, "Income differences in India is a major problem. In the sense that large number of people are affected by it. The more people that are below poverty line the more demand gets suppressed."

That’s India’s reality. Despite its 2/3rd of population living below poverty line, the nation is expanding rapidly. This only indicates the opportunity being missed.

Unlike other nations, more than 70 per cent of India’s growth comes from domestic consumer spending. And that means tapping potential of by bridging income gaps is essential for the nation.

Even more so now. Though India’s economic growth created wealth for many in Indian cities. Its given rise to a new consumer class, waiting to spend their salaries in swanky malls.

But this has only created inequality which has led to resentment. Naxal attacks and unrest is a common sight today in under developed parts of India. And this internal security situation has only made matters worse.

Paranjoy Guha Thakurta, Economist, said, "The bottom 35 per cent of this country has not improved, certainly not as much as the top. This growth is not inclusive growth and on top it has not created jobs. Especially it has been confined to a certain section of the population and worse certain parts of the country"

India stood at 134th position in the UN Human Development Index in 1984. More than 2 decades later, India’s stood at the same 134th position in 2007.

Despite being in top four nations with highest number of billionaires, a massive 836 million people in India live on less than 50 cents a day.

And this is a issue that the nation needs to tackle head-on.

Shweta Bajaj, Delhi, India, said, "Income parity or even closing in on income gaps in a country like India is a far-fetched dream. But one way for the government would be to increase investment in primary healthcare and education. The two pillars of any developing economy."

Editor:Yang Jie |Source:

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