Question

how has the untouchability act helped in reducing inequality in the society?

Answer 1

  We need to solidify the dimension along which inequality is being looked at. Untouchability is a social convention at the group level, meaning that it is social inequality. So because it is social inequality, it can't eliminate social inequality. 
You may be thinking economic inequality, which it can reduce. If untouchables are relegated to certain business/industrial activities that others are forbidden, they are benefiting, if you will, from a "barrier to entry" in industrial economic terms. This means that the untouchables' jobs must draw from a constrained pool of suppliers. This constraint allows them to collect premium prices over what would happen if the supplier market was completely open to others who might entertain the remote desire to be a mortician or a whatever else is an untouchable profession. 

Maybe the idea is that the economic benefit would release the untouchables from the shackles of oppressive social castes by giving them the resources to fight such stereotypic social stratification. It's a nice idea. 

In reality, this would only fix economic inequality. In the US, economic and social status is pretty tightly correlated so that the social transcendence dream would make sense. Places like India, there are other considerations that contribute to social status besides