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While many Indians live on less than a dollar a day, the country boasts a relatively high number of millionaires. DW takes a look at the factors behind this gap between the rich and the poor.
India is home to the fourth largest number of millionaires in Asia, with the country hosting 236,000 individuals with assets of over $1 million by the end of 2015, according to a recent report published by South Africa-based New World Wealth.
The South Asian nation also boasts more multi-millionaires than any other country in the region after China and Japan - a reflection of the enormous wealth created in India over the past two decades following the liberalization of its economy.
At the same time, this trend seems to have widened the gap between those at the top and the bottom of the wealth distribution, despite India's impressive economic growth rates.
The Gini coefficient is the standard measure of inequality, with zero representing total equality, and 100 indicating complete inequality. In India, the index rose from 30.8 in 1993 to 33.9 in 2009, the year for which latest World Bank data is available.
Growth and inequality
This development suggests that the policies implemented to boost growth and eradicate impoverishment have also contributed to exacerbating social inequality.
In the early 1990s, India unleashed a set of historic measures - including the deregulation of markets, a cut in import tariffs and an opening up of certain sectors for foreign investment - aimed at boosting the economy.
While market-friendly reforms have succeeded in pulling millions of Indians out of poverty, economists say a significant proportion of the population is not reaping the benefits of economic growth. This, in turn, has led to a small elite owning a high share of the nation's wealth.
For instance, Credit Suisse estimated in a 2014 report that the richest one percent of India's population controls about 53 percent of the country's wealth. Even central bank governor Raghuram Rajan has criticized the rise in inequality - an issue that has gained prominence not only in India, but also across the world.
Globalization and the advent of new technologies have been blamed for much of the rise, with some experts claiming these have eroded the power of labor unions, among other things. Moreover, a host of international organizations and think tanks have pointed to the adverse effects a lopsided distribution of income and wealth can have on any economy.
A weakening of welfare measures
In this context, the India expert told DW that the economic measures introduced by the government of PM Narendra Modi are unlikely to reduce inequality. In fact, in a recent op-ed published by Al Jazeera, Vakulabharanam writes that Modi has "substantially weakened" the welfare measures introduced by the previous government.
For instance, he points to New Delhi's attempts to introduce a bill that will make acquiring agricultural land easier for investors in the name of simplifying rules for doing business. "Such a bill would also displace and further impoverish the poorest Indians, agricultural workers, who would join the ranks of urban informal labor," he said.
In addition, Vakulabharanam argues that Modi's "Make in India" strategy designed to attract foreign and domestic capital to make the country an important manufacturing hub of the world "may not succeed and will not reduce inequality."
http://www.dw.com/en/what-is-driving-inequality-in-india/a-18998489
India is home to the fourth largest number of millionaires in Asia, with the country hosting 236,000 individuals with assets of over $1 million by the end of 2015, according to a recent report published by South Africa-based New World Wealth.
The South Asian nation also boasts more multi-millionaires than any other country in the region after China and Japan - a reflection of the enormous wealth created in India over the past two decades following the liberalization of its economy.
At the same time, this trend seems to have widened the gap between those at the top and the bottom of the wealth distribution, despite India's impressive economic growth rates.
The Gini coefficient is the standard measure of inequality, with zero representing total equality, and 100 indicating complete inequality. In India, the index rose from 30.8 in 1993 to 33.9 in 2009, the year for which latest World Bank data is available.
Growth and inequality
This development suggests that the policies implemented to boost growth and eradicate impoverishment have also contributed to exacerbating social inequality.
In the early 1990s, India unleashed a set of historic measures - including the deregulation of markets, a cut in import tariffs and an opening up of certain sectors for foreign investment - aimed at boosting the economy.
While market-friendly reforms have succeeded in pulling millions of Indians out of poverty, economists say a significant proportion of the population is not reaping the benefits of economic growth. This, in turn, has led to a small elite owning a high share of the nation's wealth.
For instance, Credit Suisse estimated in a 2014 report that the richest one percent of India's population controls about 53 percent of the country's wealth. Even central bank governor Raghuram Rajan has criticized the rise in inequality - an issue that has gained prominence not only in India, but also across the world.
Globalization and the advent of new technologies have been blamed for much of the rise, with some experts claiming these have eroded the power of labor unions, among other things. Moreover, a host of international organizations and think tanks have pointed to the adverse effects a lopsided distribution of income and wealth can have on any economy.
A weakening of welfare measures
In this context, the India expert told DW that the economic measures introduced by the government of PM Narendra Modi are unlikely to reduce inequality. In fact, in a recent op-ed published by Al Jazeera, Vakulabharanam writes that Modi has "substantially weakened" the welfare measures introduced by the previous government.
For instance, he points to New Delhi's attempts to introduce a bill that will make acquiring agricultural land easier for investors in the name of simplifying rules for doing business. "Such a bill would also displace and further impoverish the poorest Indians, agricultural workers, who would join the ranks of urban informal labor," he said.
In addition, Vakulabharanam argues that Modi's "Make in India" strategy designed to attract foreign and domestic capital to make the country an important manufacturing hub of the world "may not succeed and will not reduce inequality."
http://www.dw.com/en/what-is-driving-inequality-in-india/a-18998489
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