INCOME INEQUALITY

Group Members:SURAJ PATEL 14MBA074VINESH PATEL 14MBA076VIVEK PATEL 14MBA078PAYAL PATEL 14MBA080MANISH PRAJAPATI 14MBA082 SIDDTHARTH RAJGURU 14MBA084

MANEGERIAL ECONOMICS : MB700.1

May 3, 2023 1

Article topic: Income inequality up both in rural and urban areas

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INTRODUCTION Income inequality is the gap between rich and poor i.e. is the differences in the distribution of economic assets (wealth) and income within or between populations or individuals. It is the state of an economy in which the shares of total income earned by the rich and poor are highly unequal

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CAUSES OF INCOME INEQUALITY

• Labour market outcomes

• Globalization• Technological

changes

TRADE LIBERALISATION

• Gender pay gap• Nepotism• Wealth

concentration

Racial discriminationCHANGES IN

TAXATION

• Policy reforms• More regressive

taxation• Access to

education

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CAUSES OF INCOME INEQUALITY IN INDIA

1. GROWTH FACTORAs development proceeds,

the earnings of different groups rise differently. The incomes of the upper-income and middle-income groups rise more rapidly than those of the poor, during the early stages of growth through which India is passing at present shift of population from agriculture which is a slow growing sector to the modern large industrial sector which grows more rapidly. Again, there is the capital-intensive nature of the development of the modern sector.

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HIGHLY UNEQUAL ASSETS DISTRIBUTION Incomes are derived from two main sources, namely, assets like land, cattle, shares, etc., and labour. In India a few own a large chunk of income – earning assets. These inequalities enable the few to get incomes in the form of rent, interest and profit. As these assets accumulate and pass on from generation to generation, the earning capacity of these increases continuously. As for rural areas, the ownership pattern of the most important asset, namely, land, is highly unequal Private ownership of property and inheritance laws is mainly responsible for highly unequal distribution of assets.

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DIFFERENTIAL REGIONAL GROWTHOf the large many at the bottom rung of incomes, a very great proportion lives in the poor backward states regions, and most of the few at the top live in the high- income states regions.This is the geographical facet of income inequalities for the country as a whole. Within the states also there are inequalities, perhaps larger in the poorer states. Both these aspects are the outcome of the different growth rates of the states, with a few having grown at a fast rate, and many having lagged behind.

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INADEQUTE EMPLOYMENT GENERTIONPeople at the bottom could raise their economic status and to an extent reduce the distance separating them from those at the top, if they could get work. In other words, if they did not possess adequate earning assets, they could at least earn from their labour.

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Income inequality up both in rural and urban areasIncome inequality has increased in both rural as well as urban areas.According to Gini co-efficient thee has been increase in income inequality in rural India by 13% and in Urban India by 15%India Financial Protection Survey (IFPS) has covered 63.016households in depth across the countryThere was increase in inequality because of

disparity income expenditure and saving patternUrban income data shows that the size of a town/city makes a great difference to the household income levelThus income share is double than its population shareIn India the income inequality is as follow

STATES URBAN INCOME

% OF URBAN POPULATION

JAIPUR 0.99% 1.05%LUCKNOW 0.93% 0.83%CHANDIGARH 7% 0.3%

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What is Gini Co-efficient

Gini co-efficient is devised by Italin Statistician Corrado Gini in 1990It is variability measure employed by o policy maker o economist o academicians

It has value from 0 to 1 with lower co-efficient indicate more equal distribution of consumption or incomeo zero indicates Perfect equalito one indicate perfect inequality

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Statistical Data on income inequality of BRICS COUNTRIES AND USACountry Name

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

India   33.38         33.9

0   33.60  

Country Name

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

China   42.48     42.6

342.0

6   37.01    

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Country Name

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Brazil 57.68

57.42

56.77

55.89

55.07

54.69     52.

67  

Country Name 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Russia 37.14

37.51

42.13

43.71

42.27

39.69        

Country Name

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

South Africa     67.40     63.1

4   65.02    

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LEARNINGSMeaning of Gini co-efficient and for what purpose it is usedGini co-efficient is used for the calculation of statistical data i.e Growth Rate,

Population, Male and Female sex ratio etc

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References http://articles.economictimes.indiatimes.com/2008-02-07/news/27704400_1_gini-coefficient-income-inequality-households

http://timesofindia.indiatimes.com/india/Indias-income-inequality-has-doubled-in-20-years/articleshow/11012855.cms

http://data.worldbank.org/indicator/SI.POV.GINI

Link for pdf file http://www.epw.in/commentary/dynamics-income-inequality-india.html

www.slidesshare.com

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THANK YOU