Q. What are the major causes for inequality in India?
Answers
Answer:
The main reasons are the following:
1. Unemployment:
The main reason for low level of income of the majority of Indian people is unemployment and underemployment and the consequent low productivity of labour. Low labour productivity implies low rate of economic growth which is the main cause of poverty and inequality of the large masses of people. In fact, inequality, poverty and unemployment are interrelated. Since sufficient employment could not be created through the process of planned economic development, it was not possible to increase the income levels of most people.
2. Inflation:
Another cause of inequality is inflation. During inflation, few profit earners gain and most wage earners lose. This is exactly what has happened in India. Since wages have lagged behind prices, profits have increased. This has created more and more inequality. Moreover, during inflation, money income increases no doubt but real income falls. And this leads to a fall in the standard of living of the poor people since their purchasing power falls
3. Tax Evasion:
In India, the personal income tax rates are very high. High tax rates encourage evasion and avoidance and give birth to a parallel economy. This is exactly what has happened in India during the plan period. Here, the unofficial economy is as strong as (if not stronger than) the official economy. High tax rates are responsible for inequality in the distribution of income and wealth. This is due to undue concentration of incomes in a few hands caused by large- scale tax evasion.
4. Regressive Tax:
The indirect taxes give maximum revenue to the government. But they are regressive in nature. Such taxes have also created more and more inequality over the years due to growing dependence of the Government on such taxes.
5. New Agricultural Strategy:
India’s new agricultural strategy led to the Green Revolution and raised agricultural productivity. But the benefits of higher productivity were enjoyed mainly by the rich farmers and landowners. At the same time, the economic conditions of landless workers and marginal farmers deteriorated over the years. Most farmers in India could not enjoy the-benefits of higher agricultural productivity. As a result, inequality in the distribution of income in the rural areas has increased.
Explanation:
Major Causes of Income Inequalities in India: Top 3 Causes
(i) Inequalities Arising Out of Concentrated Land Ownership and Concentration of Tangible Wealth in the Rural Sector: ...
(ii) Private Ownership of Industries, Trade and Real Estates: ...
(iii) Inequalities in Professional Knowledge and Training: ...
(i) Growing Unemployment: ...
(ii) Inflationary Rise in Prices:
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