The Indian Economy Blog

July 30, 2007

Income Inequality In India: Growth, Health And Development

Filed under: Growth,Health — Dweep @ 10:58 pm

Economists frequently cite economic growth as the surest way out of poverty for the developing world. In this context, China is an often mentioned example, where double digit growth has brought over 300 million people out of extreme poverty over the past few decades. But closely tied to growth is the question of equality – of growing the pie, as opposed to distributing it.

In discussions of equality, India usually does better in comparison to China. Proponents of India’s path to development often point out that income inequality in India has historically been relatively low. The UN Human Development Report 2006 estimated the Gini Index – an indicator of income inequality – for India to be 32.5 in 2000. This compares favorably with much of the world, including the USA and OECD countries (Sweden: 25; Norway: 25.8; USA: 40.8; China: 44.7; Brazil: 58 – low numbers are better).

Yes, India’s income distribution is relatively equal. But inequality is rising – fast.

A plot of several countries’ Gini Index (at Wikipedia) illustrates growing inequality in both India and China. To further prove this point, I drew data from the World Income Inequality Database (WIID) and prior UN Human Development Reports for India. The plot below shows the Gini Index from 1951-2000 (note: not all years are available; only figures from the National Sample Survey for consumption were used).

Income Inequality, India (1951-2000)

For observers of the India-China debate, indeed for observers of economic growth, this plot is illustrative because income inequality has exacerbated considerably, rising from a historic low of 29.6 in 1990 to 32.5 in 2000 (a rise of 9.7%).

Why Income Inequality is Important: The Case of Healthcare

The obvious question to ask, of course, is if income inequality is even important? After all, if absolute poverty is dropping, relative inequality may be acceptable? Not so, because relative inequality manifests itself in many ways – most of all by reinforcing patterns of social exclusion.

One example of this is healthcare. I had noted previously that the rate at which India achieved improvements in life expectancy slowed considerably in the post-reform era. A similar trend was evident in China. I suggested two reasons for this inverse correlation with economic growth:

  1. As GNP rises, the resulting income inequality may be negatively impacting overall life expectancy. As fewer people earn more the GNP rises, but the large majority that gets relatively poorer are worse off.
  2. Another ugly truth may well be that a market-oriented India and China provide far less for their people than did socialist India and China. Under the guise of reform, governments in both countries are not only withdrawing from the market but also from public services.

The correlation between GNP growth and income inequality seems to support both these reasons. But there is one final reason to believe income inequality negatively impacts health. A study of seven African countries, published by the World Health Organization in 2000 concluded that it is the wealthier citizens – not the poorest – that benefit most from public healthcare, because health facilities are better in rich, urban areas. In Ghana the richest quintile directed almost 60% of its health spending to the public sector. In all countries, except South Africa, the best-off groups mainly used publicly subsidized health care, while the poor – less likely to seek medical help anyway – generally turned to the private sector simply because it was more accessible, though also more expensive.

Conclusion

A correlation between growth and inequality does not by itself disprove the need for economic growth. Growth may well be a necessary condition for reducing poverty, and in India it has indeed brought millions out of poverty. But surely, bringing people out of absolute poverty cannot be the ultimate goal and the only barometer of development. What India must strive for is to improve the quality of life of people – which means providing better health, education, and other services to the poor and the rich. In this objective, income inequality matters in very tangible ways, and insofar as economic growth increases inequality it may make many worse off. Now if only the economists could come up with a solution for that conundrum.

An earlier version of this post appeared here.

34 Comments »

  1. “Another ugly truth may well be that a market-oriented India and China provide far less for their people than did socialist India and China. Under the guise of reform, governments in both countries are not only withdrawing from the market but also from public services”

    You’ll have to explain Dweep, why didn’t the same happen in Developed countries after the World Wars. Also, Though your post raises some important questions along with facts to support it, I’d like to point out that When the overall economy grows, it not only enriches the citizens, The Government of that nation too becomes richer due to higher tax collections. Also, It is not very clear to me, why these very Governments of India and China which have started spending heavily on infrastructure (roads, electricity, etc.) after the economic boom will withdraw from the public services sector because the voters (at least in case of India) definitely will see through such trends. And Though India has an imperfect democracy, still.. I don’t think of voters accepting such practice very happily.

    However, One reason which I have thought of in case of India is – The Health care system here hasn’t been reformed while the Government Medicare systems have continued to deteriorate, as it happens with most Government run systems – resulting in decreasing life expectancy. (Please don’t compare pre-independence data here with post-independence data, which would serve no purpose)

    There’s no denying the fact that ideally, a good government would serve its citizens better but since bureaucracy has a tendency to worsen things rather than make things better, don’t you think that we should rather make a case for more private sector participation and a reformed Health care system to fulfill the cause you’ve been making in this post.

    Comment by Himanshu Gupta — July 31, 2007 @ 12:40 am

  2. Himanshu,
    Thanks for your comment. You raise two very important points that I will respond to separately.

    First, you question whether the Indian government is indeed withdrawing from healthcare. The short answer is yes – see for instance, this piece in the Hindu analyzing India’s public expenditure. As a % of GDP, expenditure by state governments fell between 1985-2002. Note also that all developed countries spend far more on health than middle and low income countries. I cannot prove why this is happening, but suspect two reasons are at play. First, they can – without serious political consequences. Second, because it is fashionable these days to promote “free markets” and “small” government in the developing world. In contrast, in the period following the 2nd world war, central planning was much more popular (remember, the UK nationalized more of its industry than India).

    Your second question is even more important – why not let the private sector fill the gap? Obviously, many economists, especially on this forum would support you. I beg to differ, for several reasons.

    Let us start by examining the experience of the west, and ask why the US – seen as a paragon of privatization – is struggling to reform its system and control healthcare costs? Note here the underlying incentives that drive a private system. As reported by the NYTimes (see my post) privatization and insurance together have led to constantly rising costs in the US, possibly the result of a moral hazard. Worse, the primacy of monetary incentives encourages surgeons to conduct unnecessary operations. Clearly, privatization is no panacea.

    Second, if the problem we are trying to fix is equity, privatization is hardly the solution. Yes, public health expenditure benefits the rich – but only because it is poorly designed. By contrast, a private health system will always primarily benefit the rich – in fact, it will largely ignore the poor and lead to greater social exclusion.

    There are many problems with public systems. But there are just as many problems with private systems – something liberal economists won’t tell you. For every public system that you show me as inefficient, I will show you a private one that is exploitative or monopolistic.

    Comment by Dweep — July 31, 2007 @ 1:43 am

  3. For more on privatization and the US healthcare system, see:
    BusinessWeek, and my related post here.

    Note particularly the perverse impact on cost based equity and access (emphasis mine):

    The Commonwealth survey found one area in which the U.S. assumed first place—by a wide margin: 51% of U.S. adults surveyed did not visit a doctor, get a needed test, or fill a prescription within the past two years because of cost. No other country came close to that percentage.

    Comment by Dweep — July 31, 2007 @ 1:51 am

  4. [...] An updated version of this post now appears on the IEB, with additional references. [...]

    Pingback by Income Inequality Growing in India at The Discomfort Zone — July 31, 2007 @ 1:58 am

  5. 51% of U.S. adults surveyed did not visit a doctor, get a needed test,…because of cost.

    That is crap. It is more like they believe themselves healthy so they don’t go see a doctor. Because most of the adults are employed and have health insurance. They may have to pay a $20 – $30 copay, but they have insurance coverage. The same people would not go to see a doctor even if the service is free. My husband is one of them. Our family of three pays $2000/yr premium. Yearly checkup including blood tests, mammograms and pep for women, were free. Not even a copay. But annual check up is a nusiance if you are healthy, so most of us don’t go. That has nothing to do with cost.

    Comment by ic — July 31, 2007 @ 2:57 am

  6. Posting on this blog after long time. I find lot of good discussion and posts. Good work to all.

    Now coming to opinion on current topic. During my once in two year trips to India for last decade, it is very evident that inequality has really grown bigger. Especially now in last few years of Stock market & RE Boom, the Rich seems to have gotten much more richer. The issues arising due to in-equality effect everything from Food, Healthcare, Education, Housing, Transportation etc… All things are linked like less income leads to bad living conditions and food habits, leading to more health issues, leading to sub-standard education and less opportunities. I think one needs to think wholistic, integrated solution, then just attacking each issues separately. I remember few years ago there was lot of discussion on vision 2020 for the whole country. Most of those grand goals fail.

    I think India should develop vision 2020 for a community (like suburb, town, village etc..). Each community should be rewarded for achieving community goals. The integrated approach would show the path for improving things like Health, Education, Roads, Public Toilets, Water supply, Drainage etc… This should promote healthy competition. There is hidden advantage as communities improve in quality, more folks would want to move there and residents would benefit from better property prices. I feel that is one of the cornerstone of development in US, where towns are compared till the zip level. I think local residents or businesses would be more then willing to pay for such improvements.

    Just my 2 paisa worth.

    Comment by Shailesh — July 31, 2007 @ 3:15 am

  7. [...] Rest of Article  Archives [...]

    Pingback by nakedhistorian.com · Income Inequality in India — July 31, 2007 @ 3:39 am

  8. Nice post. “Economic Growth”, per se, is not sacrosanct. Neither should we make it so. It does us well to remind ourselves that growth is but a means to achieve some greater, and more tangible, ends. Growth without control is cancerous, and uneven growth is sure to cause restlessness in society.

    Comment by Abhishek — July 31, 2007 @ 7:37 am

  9. Revolution in india may be coming. Boxwallahs and IT coolies: Beware.

    Comment by andiron — July 31, 2007 @ 7:23 pm

  10. Aaargh!

    Firstly, an increase in the Gini coefficient from 29% to 33% is not “an increase in inequality by 9%”. It just means an increase in the Gini coefficient from 29% to 33%, which hardly means anything statistically.

    Secondly and more importantly, why on earth are you expecting increase in life expectancy to be linear? Keeping a 50 year old person alive for 10 years is much easier than keeping a 60 year old person alive for 10 years. The resources required are an order of magnitude higher. Even if everyone in India got richer at the same rate, life expectancy would not increase linearly.

    Finally, there is a very important reason why life expectancy will not show linear growth – Child mortality. In 1960, 250 children out of every 1000 used to die before they were five. Now the figure is 83. One point’s decrease in Child mortality at 83 will give a much lower percentage increase in life expectancy than one point’s decrease at 250. If you looked at the same place for Child mortality figures where you looked for life expectancy figures, you will find that the rate of reduction of child mortality actually improved in the late 70s and has stayed steady since.

    Comment by Ravikiran — July 31, 2007 @ 8:29 pm

  11. The Goebellian “US healthcare = privatised healthcare” pseudo-trusim has been repeated so often that most take it as being true without even questioning. The US healthcare system isnt a free markets system.

    Free markets have competition which arises because of delicensing and low entry barriers. Firms compete without any handouts from the government, and to compete, they need to focus on their customers. The healthcare system in USA was built on subsidies, regulation and interventionism. Even today, 44% of insurance comes from government entities. When people complain about “evil insurance companies”, they dont realise that half of those are the government.

    The insurance companies and hospitals can be the way they are because they have been coddled over the last 3 decades by the HMO Act of 1973. The fallout of that act has lead to a system which is not free market, but is statist masquerading under the garb of free market. The HMOs were declining until Nixon subsidized them heavily, setting up a system where insurance companies are the King. All the incentives are aligned that way too. A Cato study has shown that regulations lead to a cost of 340 billion to the public.

    Healthcare in the US is screwed up, yes. But that is because they had the worst devised state-led program. French and British state-led programs are better.

    But anyone who treats the US health care mess as an indictment of the free markets system , either doesnt understand the history and the structure of the US health care system, or doesnt understand what free markets and privatization means…. or both.

    Comment by Gaurav — July 31, 2007 @ 8:54 pm

  12. I am not an expert on these things. I have heard the argument about inadequate state expenditure with respect to Education as well. A crucial point that anyone making such an assertion seems to miss is that *more* expenditure *doesn’t mean better* expenditure.

    Increasing expenditure on health by 3% of GDP will not necessarily lead to an improvement in the quality of health care or access to it. The argument is the equivalent of saying that just increasing the percentage of GDP being spent on petrol will improve quality and reduce inequality in its consumption.

    I think macro numbers sometimes hide some silent movements (and ignore some hard facts) that happen below the radar and beyond the comprehension of agencies which collect and analyse that data.

    A great example of this is the patterns of consumption of private education across the country. Govt stats don’t show enrollment in private “unrecognised” schools. Govt stats don’t even attempt to tell you how well these kids are doing in school.

    Pratham’s ASER really made a dent in faith in government numbers as well as the myth that *just* more expenditure on government schools *will mean* better schools.

    Similarly there is no work (which I know of or that is cited here) done on the private expenditures made by the poor on health care across India. Perhaps even small private/public investments in health care (say washing hands or cleaner cooking stoves) will yield massive improvements in health outcomes, while making only a small dent in the %age of GDP on health.

    The only micro study that I know of about private health expenditures of the poor is by two wily interns at CCS (Aditi Dimri and Amiya Sharma), who studied the Sanjay Colony slum in 2006. If they are to be believed perhaps the problem of accessing conventional health care is not so much inadequate expenditure, but inadequate supply of trained medical professionals (i.e. Doctors, Nurses and Paramedics).

    I’d earnestly request people who think about inequality and health (or any other public policy) to think: “bang for the buck”. Tracking health expenditure private or public is an interesting armchair exercise, but has no meaning whatsoever unless it is compared with health outcomes.

    To echo Ravikiran, increasing government expenditure doesn’t increase quality of life, but just increases government expenditure.

    Comment by Gautam — July 31, 2007 @ 10:28 pm

  13. sure, the rich are getting richer. but are the poor getting more poorer ? relative poverty is decling faster.

    all these talk about income inequality is not valid. Say, does
    Rwanda, where everyone is starving or below poverty line has more
    income equality ? if the majority of the population is starving then
    that nation will have more income eqaulity than say US or Japan.
    ironical, eh ?

    our socilaistic decades have instilled jealousy and plain envy for the ‘rich’. and there is a fable about Indian crabls being exported live, without any proper packing. if one of them tries to climb out of the bin, then the others will pull it back !!!

    Pls see : http://www.swaminomics.org/et_articles/et20070314.htm

    Comment by K.R.Athiyaman — August 1, 2007 @ 9:33 am

  14. Dweep,

    “if the problem we are trying to fix is equity, privatization is hardly the solution. Yes, public health expenditure benefits the rich – but only because it is poorly designed. By contrast, a private health system will always primarily benefit the rich – in fact, it will largely ignore the poor and lead to greater social exclusion.”

    Though Ravikiran, Gaurav and Gautam have very aptly countered your point still I’d like to add something. By what logic are you saying that private health system will always primarily benefit the rich? By your logic, the telecommunication and automobile revolution in India where costs have gone down for consumers, while at the same time, quality and service have improved are some sort of state planned initiatives or, exceptions to your generalized hypothesis?

    In fact, the study pointed out by Gautam in his comment above (link) nails the lie that private sector always benefits the rich and hurts the poor. Instead, it is the Governmental regulation, licensing norms, and entry barriers which stops new players from entering the market, which could have immensely benefited the consumers and ultimately, the poor.

    Since you tend to proclaim figures in support of your points, Dweep, Can you give me any example of any *free-market* where costs have instead gone up for consumers compared to previous socialistic system (caveat being that there shouldn’t have been any kind of subsidy to the public system existing earlier).

    Comment by Himanshu Gupta — August 1, 2007 @ 12:57 pm

  15. Also, Don’t give example of NAFTA in support of your argument of indictment of free-markets. Because the prevailing conditions in 1993 were much different from today’s as there was no Chinese dragon present as a competitor then, moving ahead at full speed on its economic growth path, which is hurting Mexico in today’s times. In fact, NAFTA has benefited only all the three economies of North American region – US, Canada and Mexico.

    Comment by Himanshu Gupta — August 1, 2007 @ 1:10 pm

  16. Dweep:

    While the objective of your post – to address health inequities as an economic problem – is laudable, I think by using only longevity as a proxy indicator, you weaken your own argument.

    If health and economy are to be discussed together, then the concept of QALY (Quality Adjusted Life Year), even if somewhat crude, and not just longevity is more relevant.

    The use of QALY in resource allocation decisions means that choices – whether between patients competing for scarce medical care or between patients needing publicly funded healthcare versus individuals needing road infrastructure to create economic value – are made more explicit, sometimes more explicit than we like them made.

    Thanks.

    Comment by Shefaly — August 1, 2007 @ 2:00 pm

  17. Thank you for your vigorous and critical comments. I reply separately – in reverse order.

    Shefaly, yes, I agree the use of QALY would be appropriate for establishing national spending priorities – however, I do not have appropriate figures. Since I don’t wish to do that anyway, and only provide a picture of overall healthcare, life expectancy sees sufficiently appropriate.

    Himanshu, et al – since you have turned this into a bigoted discussion on free-markets, let me point out that opposition to complete privatizaion is not necessarily an embrace of socialism/communism (and I do not remember mentioning NAFTA). However, please go back and read the BW article to understand what happens when money is your only incentive (regardless of whether the US healthcare system is private or not). Then learn something of monopolies, information asymmetry, and moral hazards. Finally, read what Joe Stiglitz says of the health market:

    But the health-care market is not an ordinary market. Most people do not pay for what they consume; they rely on others to judge what they should consume, and prices do not influence these judgments as they do with conventional commodities.

    Gautam, yours is the most compelling argument, with two points I address separately:
    First, given the huge gulf in healthcare, most developing countries would do well to expand health expenditures. That that money could be better spent (your “bang for the buck” argument) is a separate issue. Or are you suggesting that India should not/does not need to increase spending on health?

    Second, yes, one can get more “bang for the buck”. For instance, most studies point out that a majority of health problems in Africa are preventable or easily treatable at the village/primary level. Yet, governments usually spend most of their money at the tertiary/urban level. This explains why the rich receive a greater share of public health spending, and the same priorities are evident in education. Another example of more “bang” is vaccination – in 2002, 2.1 million people died of vaccine preventable diseases, and in 2003, 27 million infants were not reached by the DTP 3 vaccine.

    Note however, that the kind of investments you recommend – education, improvements in saniation, vaccination – will never be made by the private sector, because they have no, or very little ROI (Q: Why is vaccine research neglected? Read here & here). So if you wish to improve “health outcomes”, it is an irony that you are actually arguing for more, not less, public spending!

    Let me reiterate that I do not believe the public sector is efficient at delivering services. My original point is rather simple – there is often a conflict between equity and efficiency. As an aside, I also do not believe the private sector is always the answer, because contrary to free-market ideologues best hopes, “perfect” markets seldom exist. So, choose your evil. If you can counter either of these points I will happily continue this discussion, at a place of your choosing.

    Comment by Dweep — August 2, 2007 @ 3:14 pm

  18. Dweep:

    Thanks. I suppose the use of QALY for a meta-discussion of this sort would be very difficult. Much QALY data for India on specific aspects e.g. vaccination, pregnancy and post-natal care etc are available though if you want to use them in a future post.

    Comment by Shefaly — August 2, 2007 @ 8:54 pm

  19. Wait a minute! Did I get covered under the “Himanshu et al”?

    You haven’t explained why you expect growth in life expectancy to be linear. You haven’t explained why you’ve used life expectancy as a proxy for healthcare for the poor, when child mortality is clearly a better indicator. You haven’t explained why you think there is a causal relation between increase in inequality and relative reduction in government spending on health. You have not shown that there is any sort of correlation between government spending on health and actual health.

    You expect us to accept on faith that the government can in fact deliver health when the experience of the previous 60 years shows otherwise, but unless we can prove perfection in private delivery of health, we are “bigoted”? If you are going to indulge in handwaving, try it on a magician’s stage, not on an economics blog.

    Comment by Ravikiran — August 3, 2007 @ 5:43 pm

  20. Ravikiran, I am careful in my choice of words and know the difference between causality and correlation. Please do not ascribe to me what is not there – most of the questions you pose are your conclusions, not mine. They are all also addressed previously.

    Let me point out that your twin suggestions that a) public health spending may be unrelated to health outcomes, or b) that private healthcare is better, are both worthy of debate. They are also, however, unrelated to my argument and post.
    That argument is rather simple: inequality – and the kind of growth – matters, in very tangible ways.

    Comment by Dweep — August 3, 2007 @ 8:06 pm

  21. I think the comparison of the UK and the US healthcare models may be informative in the context of examining relationship between increasing inequality (at least in health terms) and the correlation with government spending.

    Ah correlation and causation. The old enemies who rear their heads again and have been addressed in great detail in another post that I wrote earlier. Interesting to see the theme keeps recurring. Perhaps a post on the concepts is warranted!

    Comment by Shefaly — August 3, 2007 @ 10:09 pm

  22. Also at the current state of Indian Economy and Disposable income of large % of population, I dont think, we should even worry about whether private or Public. Government has to take its fair share of health expenditure. However I dont think its as much a ase of Govt withdrawing as the fact that it simply doesnt have resources to spend in the health sector

    Comment by Rishav — August 4, 2007 @ 12:42 pm

  23. Dweep, are you trying to make any causal claims here? If so, do you have any real evidence for such claims? You attempt to deflect Ravikiran’s questions either by backing away from any strong causal connections (which makes the debate entirely moot) or stating that you have addressed these questions elsewhere. Neither response is satisfying, especially with the paucity of data you are mustering to reach your sweeping conclusions.

    Do you know what the life expectancy of the US was when it had a similar level of income per capita as India currently does? (I don’t have the exact number handy, but I recall it was much lower due to the state of medical science at the time). And, as of today, given that India’s income per capita remains only a fraction of that of developed countries, isn’t it remarkable that we’ve made up such a large portion of the gap on the life expectancy front? Doesn’t that indicate diminishing returns to life expectancy with respect to wealth levels, regardless of income inequality or government provision?

    Comment by Krishna — August 6, 2007 @ 5:28 am

  24. You’ve chosen words so carefully that you are saying nothing at all? If you are not proposing a causal relationship between inequality and the health of the poor, then what is the point of discussing inequality on this post?

    Comment by Ravikiran — August 6, 2007 @ 10:40 am

  25. “Or are you suggesting that India should not/does not need to increase spending on health?”
    Could you elaborate on what the difference in outcome is (if you notice a difference) between “India spending” and “Indians spending”? Sure, India needs to spend on healthcare, education, food, ,sports, vacations, what-not. But what makes it obvious that the “India that spends” is the Indian government and not individual people? Increased incomes over the last decade have done far more for the health outcomes of Indians (due to Indians being able to spend on food, hygiene and medication) than fifty years of the Indian government spending did. The share of government spending as a percentage of total healthcare spending has been declining in India (and it should remain so).

    Comment by sumeet — August 6, 2007 @ 10:44 am

  26. In addition, you cannot be seriously writing on economics without knowing what role incentives play. Here is another set of questions you could comment upon: If everyone were guaranteed to get the same perfectly equal income independent of their effort/creativity/entrepreneurship/talent, what is the incentive to put in extra effort? If perfectly equal income is not your goal, exactly how much inequality do your prescribe? How do you plan to keep that value controlled in the presence of obvious individual differences in talent and ability?
    Ironically, you allude to the “tangible role of inequality” yourself in one of the above comments.

    You seem to know all about reading statistics and coefficients while leaving all trace of intuition by the wayside. Common sense is often more valuable than calculus.

    Yes, what *has* happened to this blog?

    Comment by Sumeet — August 6, 2007 @ 1:50 pm

  27. Dweep: I am actually suggesting that there might not be a significant causal relationship between increasing public health expenditure and improvements in health outcomes. My hunch is that the link is more like this: higher individual/household incomes –> better health. I favor broader deregulation both of occupations undertaken by the poor as well as the medical and allied professions over increasing public expenditure.

    Michael Kremer’s argument is a great idea within the regulatory context against which medical research happens today. i.e. the cost of bringing a drug to the international market is roughly 200 million dollars with a lag of 5 years between patent filing and FDA/EU clearance. Such high costs prompt research on high margins drugs at the expense of bulk drugs.

    Prizes for vaccines do not need to be given only by the government but can be given by private organisations. In fact the Gates Foundation announced their vaccine prize much before the EU did, unless I’m mistaken. Health is not a unique case in this regard, innovation is regularly funded through prizes.

    If your argument were extended it would seem to suggest that simply because no one in the private sector built a space ship (before Ansari X Prize that is) there is no possibility of profit in space travel. The case seems to have been that NASA spending on space research and other regulations on space travel crowded out private investment in the area.

    Similarly high regulatory costs as well as large unaccountable public expenditures on health care might well be crowding out private investments. Much like high interest public debt can drive many low ROI private projects out of the credit market.

    Comment by Gautam — August 6, 2007 @ 3:52 pm

  28. [...] This report is follows on my previous post on the IEB on income inequality in India. In that I made some fairly basic points that a) income inequality was increasing in India (as measured by the Gini index), b) this was undesirable because income inequality reinforced social exclusion, (as a case I showed that inequality negatively impacted access to healthcare), and c) insofar as growth had not reduced, and possibly contributed to, inequality, India should revisit the kind of growth it engendered. [...]

    Pingback by Income Inequality in Asia Growing at The Discomfort Zone — August 8, 2007 @ 8:34 pm

  29. [...] I have written a lot recently on inequality – in India and in Asia. The basic point has been the same – that inequality is bad from a social and moral point, but (as the ADB argues in its report on Asia) also from an economic point of view. In the same vien I pulled up an article from the NYTimes I had saved a few months ago. [...]

    Pingback by Inequality in the US: India’s Choice at The Discomfort Zone — August 9, 2007 @ 2:17 am

  30. [...] This report is particularly fortuitous because it follows closely on my previous post on income inequality in India. In that I made some fairly basic points that a) income inequality was increasing in India (as measured by the Gini index), b) this was undesirable because income inequality reinforced social exclusion, (as a case I showed that inequality negatively impacted access to healthcare), and c) insofar as growth had not reduced, and possibly contributed to, inequality, India should revisit the kind of growth it engendered. [...]

    Pingback by The Indian Economy Blog » Income Inequality In Asia - II — August 9, 2007 @ 2:18 am

  31. Just saw a paper from Yahoo on India’s income disparity:

    (http://news.yahoo.com/s/nm/20070810/wl_nm/india_poor_dc;_ylt=ArJ6O3Kun7UIEuSsIRriRTlvaA8F)

    Nearly 80 percent of India lives on half dollar a day
    Fri Aug 10, 10:08 AM ET

    Can someone comment on how the Gini Index will be calculated if the data presented in Yahoo article is correct?

    Some quotes from the paper:

    1. Seventy-seven percent of Indians — about 836 million people — live on less than half a dollar a day in one of the world’s hottest economies, a government report said.

    2. The state-run National Commission for Enterprises in the Unorganized Sector (NCEUS) said most of those living on below 20 rupees (50 US cents) per day were from the informal labor sector with no job or social security, living in abject poverty.

    Around 26 percent of India’s population lives below the poverty line, which is defined as 12 rupees per day, said officials.

    According to the report, based on data from 2004-2005, 92 percent of India’s total workforce of 457 million were employed as agricultural laborers and farmers, or in jobs such as working in quarries, brick kilns or as street vendors.

    Comment by thecupgr — August 12, 2007 @ 4:44 am

  32. The declining GINI index from 1950s to 1990s may just reflect the fact that there was not much development in that period or can be intepreted as a failure of socialist system. Also it might simply be explained by the rapid increase of population in the countryside where the income disparity is minimal.

    Likewise, the increase of GINI index after 1990s can be seen as an indication of rapid economic development.

    So the argument may be against the better equality under the socialist system.

    Comment by thecupgr — August 14, 2007 @ 4:32 am

  33. Health and Education are primary responsibility of a Nation Most developed countries promote public healthcare vis a vis Private Healthcare . Private Healthcare is expensive and can be accessed by only 20 % of population and 80% opt for Public Healthcare which is in dire state of affairs in India . Most metros are gearing for Health tourism and making quick buck and Surgeons / Doctors of Private Hospitals are having a gala time charging innocent patients with their packages whether they are needed or not Expensive surgeries whether indicated or not . Health insurance is becoming more pronounced in Urban area but again afforded by perhaps 20% of population What is needed is a colossal effort to promote Public Healthcare which is available at affordable cost to all , more emphasis of developing better Environment, Cleanliness reducing pollution and more of Primary Health Care which will reduce the burden of Tertiary Care . Year 2020 should see all citizens getting the fundamental rights of Free or affordable Education and Health We say we have 60 years of independence but what we have achieved is the growing difference between the haves and Have nots ! and unfortunately its widening still further !

    Comment by Rajeev Pradhan — August 23, 2007 @ 3:27 pm

  34. Well with this year’s budget the government has taken adequate steps to solve the problem of income inequality.. however we will still have to wait and see wether they will be able to fullfill their promises or see wether it is just another bunch of empty promises just made to stay in power. all we can do now is wait and watch.

    Comment by Shawn Chatterton — March 1, 2008 @ 2:33 pm

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