Tackling inequality in India: Is the 2019 election campaign up to the challenge?

In this new issue brief entitled “Tackling inequality in India: Is the 2019 election campaign up to the challenge?” [English version | Hindi version], Nitin Bharti and Lucas Chancel discuss the extreme inequality context in which the 2019 elections take place, analyse major policy proposals to address inequality and formulate new proposals to promote more inclusive growth strategies in India.

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Media contact: olivia.ronsain@wid.world | press@wid.world

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Summary 

“Economic growth has been highly unequal in India over the past decades. With the 2019 elections, the focus is being progressively shifted to the question of economic inequality.

The new reservation law recently adopted by Parliament, which seeks to improve reservation with income and wealth inequality measures, may be usurped by the wealthiest. To ensure that this reform serves social justice, new reservation thresholds should be set a much stricter level.

Using simple projections, we find that a minimum income set at INR 72,000 would cost about 1.3% GDP and benefit the bottom 33% of households. If it was set at INR 100,000, the scheme would benefit the bottom 48% of households and cost 2.6% of GDP. In either case, it would represent a substantial improvement in living standards for the poorest segments of society.

So far, the question of social transfers has been largely neglected from the political campaign. While educational spending has declined since 2012, the volume of spending cannot be ignored.

Debates have also, so far, said little about progressive financing of social measures. Progressive taxes on income and wealth could address extreme inequality at the top, while financing social spending for bottom and middle income groups.”

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This graph shows the number of households benefiting from a minimum income under Scenario A (minimum income of INR 100,000 per household per year). See the paper for more details.