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Rising Gap in Incomes |

Rising Gap in Incomes

Context

∙ According to a recent report by the State Bank of India (SBI), India has witnessed a significant fall in inequality over the last decade.

Key Findings

∙ The report claims that the Gini coefficient has fallen from 0.472 in 2014-15 to 0.402 in 2022-23.

∙ The Gini coefficient falls for regular wage and casual wage workers, but rises for the self-employed. However, the changes are largely minimal.

The polarization of incomes

∙ The fall in the Gini coefficient is accompanied by a polarization in incomes. Incomes of the top 10% have grown faster than the bottom 30%, with polarization largely seen amongst self-employed workers.

∙ The category of the self-employed includes own-account workers, such as individual farmers, roadside hawkers, etc. and those who are self-employed but also employ other workers.

Gini Coefficient for different segments

∙ The Gini for the self-employed workers rises from 0.37 to 0.3765, an increase of 1.5%.

∙ For regular and casual wage workers, the coefficient register falls of 1.7% and 4.8%, respectively.

∙ Though the Inequality has fallen, inequality among the top income earners seems to have fallen far more.

Concern

∙ The analysis is conducted on taxpayer data, and a majority of income-earners fall outside the tax net.

∙ According to data from the 2022-23 Periodic Labour Force Survey (PLFS), nearly 80% of income-earners earn less than 2.5 lakh per annum — the minimum taxable amount.

∙ Only those individuals who earn income from work are considered in the report. It excludes those who work as unpaid family helpers, a large proportion of whom are women.

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