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Economy
Mahesh

24/01/24 07:05 AM IST

The rising gap in incomes

In News
  • According to a recent report by the State Bank of India (SBI), India has witnessed a significant fall in inequality over the last decade.
Major takeaways
  • The report claims that the Gini coefficient — a standard measure of inequality that ranges from 0, indicating perfect equality, to 1, indicating perfect inequality — has fallen from 0.472 in 2014-15 to 0.402 in 2022-23.
  • A fall of almost 15% in the Gini coefficient indicates a significant reduction in inequality.
  • Incomes of the top 10% have grown faster than the bottom 30%, with polarisation largely seen amongst self-employed workers.
  • Only those individuals who earn income from work are considered, excluding those who work as unpaid family helpers (a large proportion of whom are women)
  • The category of the self-employed includes own-account workers — such as individual farmers, roadside hawkers, etc. — and those who are self-employed but also employ other workers.
  • The Gini for the self-employed workers rises from 0.37 to 0.3765, an increase of 1.5%.
  • For regular and casual wage workers, the Gini coefficients register falls of 1.7% and 4.8%, respectively.
  • The Gini coefficient is an aggregate measure, which delivers an estimate of inequality considering all incomes in a given sample.
  • It is possible for the Gini coefficient to register a fall in inequality even with a divergence between different classes of income-earners.
  • The income of the top 10% of self-employed individuals was 8.3 times that of the bottom 10% in 2022-23, a significant increase as compared to 2017-18.
  • The entire polarisation in incomes has come from divergence in incomes of the self-employed.
Concerns
  • The analysis is conducted on taxpayer data, and a majority of income-earners fall outside the tax net.
  • According to data from the 2022-23 Periodic Labour Force Survey (PLFS), nearly 80% of income-earners earn less than ₹2.5 lakh per annum — the minimum taxable amount.
Source- The Hindu

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