Recent Progress Made in Income Inequality Reduction in India - Example

Recent progress made in income inequality reduction in India March 30, Recent progress made in income inequality reduction in India Introduction In many developing countries, one of the major challenges that affect the lives of citizens is the issue of income inequality. Notably, a large number of the population lives below the poverty line because of unequal distribution of income. The governments in such countries, through various initiatives have struggled to ensure that several measures are taken to ensure that there is significant reduction in income inequality.1 In fact, the governments have come with a number of initiatives meant to help individuals living below the poverty line improve the standards of their living. India, for instance, is a developing country whose income inequality stands at a significant rate. Moreover, the countries as a significant number of people who own very little economic resources with the minority owning the larger share of the economic resources of the country. However, there is little progress that India has made in trying to reduce income inequality. This paper seeks to come up with a comprehensive analysis of the recent progress that India has made in reducing income inequality. There is no objection to the fact that India has made great steps in reducing the income inequality gap from its independence. Since economic development is inclined to stable political environment, India has ensured that the aspect of political goodwill is guaranteed.2 Currently, India is seen as one of the nations in the world that have the most stable democratic space. Currently, India’s income per capita is six times the amount it was at the time when the country got its independence. Having put in place the most effective economic policies, India has achieved great economic success in the last two decades. In addition, India has made great progress not only in terms of economic well-being, but also in terms of social welfare and population standards. Despite having the fastest growing population, India has achieved great success in its social welfare that has seen a rise in life expectancy by double improvement margin. Specifically, currently, India’s life expectancy stands at 68 years, showing how well the population gets personal welfare and amenities. Another progress that India has made in order to ensure reduction in income inequality is coming up with a number of poverty reduction strategies that are aimed at helping the country’s large population share social and economic problems. Within the last half a century that India has been independent, the country has worked towards ensuring that there is reduction in problems such as famine, poor education and, poverty. In addition, the country has come up with the most efficient population control strategies that have greatly helped in ensuring that the available resources are in line with the country’s total population. Besides, the country has come up with the most effective economic growth policies that are aimed at ensuring there is rapid improvement in the country’s economic viability.3 Improved rate of savings has also been seen to be a great move that has helped reduce the income inequality in India. As increase in savings would show an increase in the total amount of income among the population, while a reduction in savings would show great reduction in the level of income among Indian citizens.4 As shown in the figure 1 a and b below the reduction in savings would greatly affect the income inequality aspects in India negatively. Figure 1 a and b: Variation in the marginal savings rate (From Lecture material). Despite the pace of economic growth in India being slow and uneven, it is quite imperative to understand the country’s annual growth has shown tremendous improvement in line with income inequality reduction aims. In addition, India has come up with a strategy that is aimed at ensuring there is reduction in income inequality between the genders through various economic programmes aimed at empowering women.5 In fact, India has made it easier for women to access business loans and grants in order to significantly improve their welfare and reduce income inequality that is based on gender imbalance. Moreover, India has come up with very effective strategies that are directed towards ensuring there is economic liberation from various factors that can lead to poor economic growth. This progress has made it easier for India to help its population in reducing poverty as well as create potentials for growth in the near future. 6 Figure 1: India’s GDP growth from 2007-2015.7 Despite having an uneven GDP as shown in the figure 1 above, India has invested in various economic development projects whose potential is directed towards improving the economic growth. In fact, reduction in income inequality is one of the major drivers towards India’s economic development strategies. India has made human capital one of its most intrinsic priorities that are mainly directed towards income inequality reduction. In addition, India has increased cooperation with other neighbouring countries in Asia to ensure combination of pro-development policies in the end.8 Another major progress that India has made is the utilization of its human resources in creation of the most affordable social services to the population. In fact, health and education has been prioritized in order to ensure that India’s human capital is not only healthy, but also skilled in various economic fields. Apparently, India has accredited its education system to ensure support to the poor and given high concerns to factors such as support to the young in order to create experts in them. In spite of having an education system that has been criticized to be non-development related, India has laid more emphasis in ensuring that there is great success in its education sector.9 India has also come up with various policies that have allowed centralized growth to take centre stage in the creation of development programs. In the last five years, for instance, India has ensured that it comes up with affordable cost of inputs to ensure there is increased industrial production and integration of the world economy. Besides, India has expanded its markets in order to fit consumers by ensuring there are great improvements in the demand and supply for commodities. It has been achieved through various fiscal and monetary policies that are meant to reduce the overall cost of production. For instance, the government, through the central bank has ensured reduced rates of borrowing to encourage more upcoming entrepreneurs. This has widened opportunities for the poor in order to help them in coming up with businesses that can help raise their standards of living.10 The prosperity of Indian population has risen significantly over the past few years due to the strategies that both the government and the corporates have created. However, numerous analysis contends that the growth has not been effected to the degree that one would expect in a nation like India. Consequently, various economists argue that India needs to accomplish more with its current monetary advancement strategies. For instance, 33% of the current population in India still live under the meagre daily income of $1.25.11 In total terms, this implies that around 400 million Indians live in abject destitution, which is more than the whole population in the United States.12 India, likewise, has the most elevated degree of children who are malnourished on the planet and scores poor statistics in the fields of organizations, wellbeing, training, imbalances, defilement, and so forth. This is surely unmistakable from a similar point of view. Despite its problems above, India has come out to be among the best countries in Asia that have tried to reduce the wide income inequality gap between the poor and the rich. "While India has been surpassing different nations in the advancement of its genuine salary, it has been surpassed as far as social pointers by large portions of these nations."13 The deficient changes in Indias social welfare and advancement just need to be unmistakably noticeable when contrasting the figures with those of other, comparative nations. The correlation with non-democratic based countries such as China, it is obviously the most viable assessment to make, since both nations are in pretty much the same financial conditions. Thus, India has achieved great progress in ensuring that it uses the available resources in reducing the level of poverty among its large population.14 On the aspect of instructive issues, India emerges top of other Asian economies for its moderate advancement in decreasing the current number of non-educated and unskilled population. It is by the informal sectors that India has ensured there is reduction in poverty levels among the wide majority. The government has ensured it offers training to unskilled youths in order to reduce the level of unemployment and create the highest income inequality reduction plan. Furthermore, the Indian government has developed infrastructure in order to ensure there is rapid industrialization that would help promote the nation’s economic progress.15 Figure 2: Income distribution by percent of Households.16 The income distribution in the figure 2 above shows great success in India’s progress in reduction of income inequality among various households. Because of the government’s efforts to promote small-scale business among the low-income earners, the country has been able to make great strides in improving the life standards of its wide majority. In addition, the households have also come up with various projects that enables them provide raw materials to firms in exchange of increased income.17 Indias development strategy that is directed towards fuelling economic and social growth using market-based strategies and monetary policies is by far effective. Based on the notion that eradicating poverty is one of the major steps towards development, "growing the economic pie rather than slicing it" carried great lessons to other developing countries across the world. By coming up with effective market based policies, India has struggled to ensure that its economic progress increases significantly. In fact, India’s development plans have always been directed towards ensuring that abject poverty is reduced using the most effective income management tools. The tools include interest rates, taxes, subsidies, as well as effectiveness in creating the best government institutions that would provide highly affordable services to the people.18 Innovative change and advancements are key wellsprings of structural change. In Schumpeters perspective, advancements lead to "imaginative obliteration" a procedure whereby divisions and firms connected with old innovations decrease and new parts and firms rise and develop. More profitable and gainful areas and firms remove less beneficial and less productive ones and total gainfulness in the economy increments. Innovative change is; therefore, at the focal point of cutting edge monetary development.19 Technological and innovative change occurred principally in the assembling part thus meeting expectations in diminishment of destitution. Moreover, mechanical change in certain assembling parts as a main impetus for profit development in a few different segments. At the point when general development quickens, economic progress normally drives the way and becomes extremely faster than different areas.20 At low salary levels, the offer of assembling in GDP is, notwithstanding, low and its quick commitment to total development minor. At the point when producing expansions its yield impart frequently as a reaction to changes in residential interest and in near focal point quicker monetary development discernibly raises the total development rates of yield and work gainfulness.21 India has ensured the annexation of the most suitable technological factors in ensuring that it reduces its income inequality gap. Consequently, India has carried out policies that are directed towards the use of Information technology in production to increase the output in various industrial sectors. In fact, India has ensured that the commodities produced from its main industries provide the most effective satisfaction of its population’s demands. In addition, increased use of technology has helped in mass production that enables India to export some of its products hence increase the income from local production of its goods and services.22 In summary, income inequality is an aspect that has hindered development in a number of developing countries across the world. It is, therefore, quite imperative for countries like India to ensure that they use the best strategies in reducing the income inequality between the rich and the poor. Magnificent progress has been made in the reduction of poverty among Indian citizens. Through various economic, political, and social aspects, India has worked towards ensuring that it creates the highest reduction in income inequality globally. Despite having a large population, India has made tremendous steps in reducing the income inequality gap between the middle class and the high-class citizens. References Ackerman, F., Can we afford the future?: the economics of a warming world. 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