Bad Days Ahead: Income Inequality To Rise Causing More Social Tension

Income inequality in the country is likely to worsen due to the government's inability to create jobs, warns a report by financial institution Ambit Capital. The report also added that joblessness, which has been deteriorating in the last few years mixed with income inequality, will impose a higher risk of social tension.

Income inequalities have been rising systematically since the 1980s. Ambit said the bottom 50 percent of the country's population accounts for only 11 percent of the national income, while the top 10 percent accounts for 29 percent, which is a big difference.

Even though per capita income stands at Rs 121,138, it is shockingly low at a mearge Rs 26,192 for the bottom 50 percent of the total population. This is the same as a citizen of Madagascar and lesser than a citizen of Afghanistan which has per capita income of Rs 36734.

Just 13 million of the population or the top 1 percent of the population has a per capita income of Rs 35,16,276, which is comparable to Denmark's and is higher than the per capita income of Singapore at Rs 34,67,886.

Noting that the government's inability to create jobs is likely to intensify inequalities, the report says that the increasing demand for jobs under the MNREGA scheme is expressive of the deteriorating jobs potential particularly in the lowest economic strata. The weakness in blue-collar jobs is also revealed by the stagnant rural wage growth.

The report warned that a combination of joblessness and inequality leads to an increase in social problems, such as a surge in crimes.

The report says, "Our own experience shows that states like Bihar and Uttar Pradesh with significantly lower per capita income than national average and high degree of inequalities, have very higher levels of crime rates than other states.”