What are the Important Causes of Income Inequalities in India

There are various factors responsible for this phenomenon. We may group them under the following four heads:

Growth Factor:

As 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. This happens in the early stages of growth through which India is passing at present.

The explanation lies in the 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.

Since this absorbs less labour, wages form a smaller proportion of total income. Hence, the income spread is not wide enough. On the other hand, the capital-intensive type of growth leads to concentration of income in those few hands who supply capital.

Highly Unequal Asset 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. Some others, who do not own, or own a part of the assets they operate, organise finances through banks, cooperatives, etc, and acquire/hire productive 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. The marginal households (with holdings less than 1 hectare), which account for as many as 72 per cent of the rural households own very little about 17 per cent of the land.

At the other end, there are those with large holdings (of more than 10 hectares) who are about 1 per cent of the rural households. But they have under their ownership as much as 14 per cent of the area.

Private ownership of property and inheritance laws is mainly responsible for highly unequal distribution of assets.

Inadequate Employment Generation:

People 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.

But there too the situation was not favourable. For long the increase in employment opportunities remained less than the rise in the labour force.

Differential Regional Growth:

Of 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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Widening Income inequality!

Income inequality in India

As of Nov 2016, India is the second-most unequal country in the world. The richest 1% of Indians own 58.4% of wealth. The richest 10 % of the Indians own 80.7 % of the wealth. This trend is going in the upward direction every year, which means the rich are getting richer and the poor are getting poorer. Inequality worsened since the establishment of income tax in 1922, overtaking the British Raj’s record of the share of the top 1% in national income, which was 20.7% in 1939–40.

Income gaps

According to Thomas Piketty, there is a “huge” gap in data about income tax in India. Since the most of the population is out of income-tax database, most of the calculations (such as NSSO) is based on consumption-expenditure data instead of income data. According to the World Bank, the Gini coefficient in India was 0.339 in 2009.The Gini coefficient in India went up from 0.43 (1995–96) to 0.45 (2004–05).According to the 2015 World Wealth Report, India had 198,000 high net worth individuals (annual income over $1 million) with a combined wealth of $785 billion.In 2016, the International Monetary Fund in its regional economic outlook for Asia and Pacific said that India’s Gini coefficient rose to 0.51 in 2013 from 0.45 in 1990.

Class divide

Credit Suisse’s Global Wealth Databook for 2014 reports bottom 10 per cent of the Indian society owned merely 0.2 per cent of national wealth while the richest 10 per cent have been getting steadily richer since 2000.

Causes

N. C. Saxena, a member of the National Advisory Council, suggested that the widening income disparity can be accounted for by India’s badly shaped agricultural and rural safety nets. “Unfortunately, agriculture is in a state of collapse. Per capita food production is going down. Rural infrastructure such as power, road transport facilities are in a poor state,” he said. “All the safety net programmes are not working at all, with rural job scheme and public distribution system performing far below their potential. This has added to the suffering of rural India while market forces are acting in favour of urban India, which is why it is progressing at a faster rate”.

Impact

The growing income inequality in India has negatively impacted poor citizens’ access to education and healthcare. People working in unorganized sectors are the worst sufferers of economic inequality. They are characterized by low wages; long working hours; lack of basic services such as first aid, drinking water and sanitation.

Government and Income inequality

The citizens’ collective Wada Na Todo Abhiyan argues that the present BJP government in India, through their pro-corporate and anti-poor policies is allowing the stark income inequality to increase more than ever. While the government reduces fund for Education, Health and other services, they say that it gives enormous tax exemptions for the corporate billionaires.

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Your Coveted House Made to get more rights!

New policy to define part-time workers, full-time workers, live-in workers and employers.

The government is planning to formulate a national policy for domestic workers with an aim to expand the scope of applicable legislation, policies and schemes such as minimum wages, social security and skill development programmes. The ministry has invited views of all stakeholders and general comments on the National Policy for Domestic Workers till November 16, according to a notice by the Ministry of Labour and Employment.

The new policy proposes to clearly define part-time workers, full-time workers, live in workers and employers and private placement agencies.

The new draft policy, however, does not prescribe a minimum wage for a domestic worker, although the earlier draft a couple of years ago had proposed a minimum salary of Rs 9,000 per month for the skilled full-time domestic help along with benefits including social security cover and mandatory leave.

As per the notice, the policy intends to set up an institutional mechanism for social security cover, fair terms of employment, grievance redressal and dispute resolution. It provides for recognising domestic workers as a worker with the right to register themselves with state labour department or any other suitable mechanism. It also aims to expand the scope of existing legislation, policies and schemes to grant domestic workers rights that are enshrined in laws for other category of workers including minimum wage, equal remuneration, etc.

The policy proposes to promote the rights of domestic workers to organise and form their own unions/associations and affiliate with other unions/associations. The policy will also provide for model contract of employment with well defined period of work and rest along with regulation of the recruitment and placement agencies by respective governments through formulation of a policy.

The labour ministry notice also states that the policy proposes to have tripartite implementation committees at Centre, state and district levels.

The category of domestic workers has largely remained outside the ambit of labour laws in India, often making them vulnerable to exploitation and violence. Earlier this year in July, a group of domestic workers had carried out stone pelting  in Noida’s Mahagun Moderne residential society over the alleged beating up of a 26-year-old domestic help by her employers, who in turn had accused her of theft.

Domestic workers are not included in the scope of the current labour laws because of the constraints in the definition of either the ‘workmen’, ‘employer’ or ‘establishment’. The nature of work, the specificity of the employee-employer relationship and the work in private households instead of public and private establishments, makes the coverage of domestic workers under the existing laws more challenging.

To include the domestic workers under the labour laws, the definitions will have to be amended. The labour laws treat only establishments, mines and factories, as workplaces. Private homes are treated as private spheres beyond the reach of these laws. The definition of the workmen or the employer also excludes the domestic workers from the scope of these laws and even the placement agencies get out from the ambit of the labour laws.

 

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Beware! Even Justice can cheat you! Fake Advocates abound!!!

CHENNAI: It may be game-up for about 1,000 fake lawyers `practising’ in Tamil Nadu courts, as the Madras high court has given a free hand to the state Bar Council to wield the axe.

While 42 got enrolled as `lawyers’ without furnishing any basic documents and without even providing addresses, several hundred people had enrolled as `lawyers’ without even clearing Class 6 or 7 and 10. There was a curious case of one person, who had enrolled twice -once in 1998 and then in 2004 -submitting different credentials.

Justice N Kirubakaran, poring over these details submitted by Vijay Narayan, advocate-general and ex officio chairman of Bar Council of Tamil Nadu and Puducherry , expressed his shock that bar council members had enrolled ineligible persons carrying open university and distance education degrees, without even understanding judicial pronouncements on the matter. Without understand ing or incapable of understanding the aforesaid position of law, it is surprising to note that elected Bar council members had allowed to enroll 713 persons with open university MA degree from the year 2009 to 2016. It is open to the advocategeneral, who is the ex-officio chairman, to issue notice to those 713 candidates regarding cancellation. It is also open to the bar council to take any action, including the filing of police complaints, against 42 persons who enrolled without documents,” said
Persons who have not even passed 6th or 7th and 10th standards are able to procure open university MA degrees and subsequently , the degrees have been utilised to get admissions into law colleges and obtain law degrees.Based on the same, they started enrolling those degrees which are obtained in violation of the UGC Regulations, 1985. The Supreme Court in 2009 made it clear that master degrees awarded in violation of Regulation 2 of UGC Regulations, 1985 by a university under open university system without requiring three years’ graduate degree is void. Apart from that Legal Education Rules, 2008 also prohibits the entry of open university degree holders,” Justice Kirubakaran said.

Referring to a recent incident of two warring factions of a private engineering college trust engaging advocates to take over the college or to retain the college, Justice Kirubakaran said only a negligible number of advocates were engaged for such kind of practice and the number was increasing day-by-day .
“The time has come to save advocates who are wedded to the profession,” he said.

The judge has already raised 25 queries and impleaded the Bar Council of India as well as the Centre regarding the quality of legal education, number of law institutes and the need to reduce them by around 85%.
by around 85%.

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Low Employability of Engineering Student’s requires capacity building of faculty

In a move aimed at improving their employability prospects, engineering students across the country will have to undergo at least three mandatory internships during their course from this academic year. It will be the responsibility of colleges to ensure internship for students.

In 2015-16, 56% students graduating from engineering colleges remained unemployed.
Not only this, their teachers too will have to undergo mandatory refresher course annually, failing which the approval to their institute can be denied. So far, the system of summer internships was only being followed by reputed engineering colleges.

“Every student in technical institute should undergo three internships each spanning four to eight weeks before completion of his/her under-graduation course. The responsibility will be on the institute to help students find a suitable industry for the internship, Lok sabha was informed.

He said as per the data collected by AICTE from 10,328 technical institutes, of the 15.87 lakh students only 6.96 lakh got jobs through campus placements in 2015-16 . However, the minister claimed that the number could have been higher had the students not opted for higher studies and start-ups.

The low-employability levels are attributed as much to the lack of requisite skills as the falling demand in the industry.
Meanwhile, the teachers of engineering institutes will have to take up online courses offered on government’s SWAYAM portal. “Every teacher in each of the technical discipline shall mandatorily undergo an annual refresher course through SWAYAM portal (Massive open online course), encapsulating all advances in their field of study.

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