·         Income is defined as household disposable income in a particular year. It consists of earnings, self-employment and capital income and public cash transfers; income taxes and social security contributions paid by households are deducted. The income of the household is attributed to each of its members, with an adjustment to reflect differences in needs for households of different sizes. For example, a statistic may indicate that 70% of a country's income is controlled by 20% of that country's residents

·         Income inequality among individuals is measured here by four forms in India.

·         Inequality of income,

·         Inequality of consumption expenditure,

·         Inequality of asset holding,

·         Regional Inequality.

·         Inequality of the distribution of wealth and income refers to a situation in which small section of society share large part of nation income whereas large sections of society are devoid of income. There is an unequal distribution of income.

·         Inequality in consumption expenditure refers to a situation in which a large percentage of total consumption expenditure is incurred by a small percentage of population.

·         Inequality of consumption expenditure shows that a large percentage of bottom population has to struggle to survive, whereas a small percentage of top population enjoys a lavish lifestyle.

·         Regional inequality refers to inequality of growth process across various states in the country and different regions with in a single state. Some states or regions are far more prosperous than the others.

Nature and Extent of Economic Inequality in India

·         In India inequality of income is calculated based on the data on consumption distribution (provided by NSSO) and income tax data. To examine the distribution of income in India, a Committee was appointed by the Government under the chairmanship of Prof. P.C. Mahalanobis. The committee submitted the report in 1964. Besides this Committee, National Council of Applied Economic Research (NCAER), Reserve Bank of India, World Bank and many economists have undertaken important research studies relating to distribution of income. However, these studies relate to different periods of time, and are based on different methodologies. The results of these studies are not strictly comparable. Higher Lorenz ratio or Gini-coefficient points to a greater degree of inequality. Gini index in India was 33.4 in 2011-12 which points to an alarming magnitude of inequality in India.

Inequality Trends in States

·         Economic disparity is easily visible in the country by the fact that 40-50% of the populations in Bihar and Orissa live below the poverty line while states such as Delhi and Punjab exhibit very low poverty ratios

·         There are in total 7 states of India which are lagging behind in the race of economic growth namely Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh.

·         Annual growth rates of different states between 1999 and 2008 strongly reveals economic disparities in the country as per the data Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much ahead in the race as compared to  Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%).

·         Economic disparity in India can be compared by the fact that growth rates of the states of the single country varies to the greater extent. Rural Orissa (43%) and rural Bihar (40%) stands in the list of states with the poorest growth rates in the world while rural areas of other states of the same country India, lies well among the middle-income countries as rural Haryana (5.7%) and rural Punjab (2.4%).

·         Though the Indian Govt. is constantly trying to improve the economic status of different states by implying different policies and programs yet the issue is of major concern. The five-year plans introduced by the Indian Govt. have proved to be useful in reducing regional disparities. 

Causes of Inequality of Income and Wealth in India

·         Government Policy to Reduce Inequalities of Income and Wealth

·         Ever since independence, Government has been focused on reduction of inequalities of income and wealth in the country.

·         Land Reforms Land reforms have been introduced to remove inequality in the ownership of land. Land in excess of the ceiling limit has been distributed among the tenant farmers, and among the small and marginal holders.

·         Expansion of Public Sector Government pursued a policy of assigning a ‘flagship-role’ to the Public Sector. Many commercial banks were nationalized in 1966-68. However, since 1991, there has been reversal of the government policy.

·         Privatization has become the centre stage of growth-strategy. This is because public sector has only yielded inefficiency and bankruptcy.

·         Encouraging Small Scale Industry The Government is providing support to develop small scale industry and MSME sector through various credit support and tax exemptions.

·         Monopolies and Restrictive Trade Practices Act Monopolies and Restrictive Trade Practices Act, 1969 was passed to put a check on concentration of economic power.

·         Poverty Alleviation Programmes Government should frame poverty alleviation programmes particularly those which provide gainful employment to the economically weaker section of the society.

·         Pricing Policies Government should design the pricing and distribution policies to reduce the inequalities present in the society. Government should provide the basic amenities at lower price to the weaker sections of the society.

Income Inequalities compared with other countries

·         The International Monetary Fund’s most recent report on the Asia-Pacific region confirms what we all know India is a highly unequal society

·         India not only has one of the highest levels of inequality in the region, but it also shows very large increases in inequality since 1990 Its net Gini index of inequality (based on income net of taxes and transfers) rose from 45.18 in 1990 to 51.36 in 2013. Only two countries in the Asia-Pacific region Papua New Guinea and China are more unequal. Indeed, the net Gini coefficient in India is much higher than the average of 43.69 for Latin America, long excoriated as one of the most unequal regions in the world.

·         India has made great strides in reducing poverty, thanks to high growth. The chart shows the percentage of the population below the poverty line of $2 per day in 2011 purchasing power parity terms. But note that the rural areas of China, Vietnam and Indonesia all started with higher poverty levels than India in 1990 and have been able to do better than India in reducing poverty. A more equitable distribution in the gains from growth would have helped lower poverty further.

·         One of the main reasons for India’s lack of productivity is the high proportion of its population in informal employment. India’s share of 83.6% is much higher than those of China, Thailand and even the Philippines. “Reducing labour market duality and informality, while putting in place well-designed labour market policies to boost job creation, can reduce income inequality,” says the IMF report.

·         The reasons for high income inequality include disproportionate returns to education for the well-off, the capture of subsidies by the rich and the rural-urban income gap, apart from the initial heavily skewed distribution of wealth.

Poor vs Rich in India

·         India’s richest people accounts for 45% of aggregate household disposable income while the poorest people earns barely 7% of the aggregate income.

·         The NSSO survey results show that households in the top quintile earn nearly four times as much as households in the bottom quintile. But given that poorer households also tend to be bigger, the difference in per capita incomes is greater. The per capita income of the top quintile, at Rs7,974 per month, is nearly 6.5 times that of the bottom quintile. Given the lower income and the bigger household size, poorer households end up spending most of what they earn. The poorest quintile is able to save just 10% of household earnings. In contrast, the top quintile is able to save 47% of household earnings

·         While the NSSO surveyed 101,651 households of which 41,968 (41.3%) were urban households, the ICE 360° survey covered 61,000 households of which 36,000 (59%) were urban households. However, the rural sample of the ICE 360° survey is less than half of the NSSO sample. Nonetheless, all the estimates of each region have been derived by adjusting for the respective population of those regions.

·         One of the most attractive features of the survey is that it is representative at the level of economic clusters. Urban India has been divided into four clusters:

·         metros (population of more than five million),

·         boom towns (2.5-5 million),

·         niche cities (1-2.5 million) and

·         other urban towns (less than one million).

·         Based on a district development index, rural India has also been sliced up into three different clusters: “developed rural”, “emerging rural”, and “underdeveloped rural”.

·         The first category includes districts such as Bathinda (Punjab) and Kangra (Himachal Pradesh). The second category includes districts such as Latur (Maharashtra) and Kamrup (Assam) while the last category includes districts such as Kalahandi (Odisha) and Bastar (Chhattisgarh).


·         The average income of households living in metros, at Rs29,690, is two-and-a-half times the average income of households living in underdeveloped rural areas. The average consumption expenditure of households living in metros, at Rs17,641, is roughly two times the average consumption expenditure of households living in underdeveloped rural areas.

·         Interestingly, the average income and average consumption expenditure of households in developed rural areas is roughly equal to that of households living in niche cities, shows the survey.

·         The survey underlines the profound influence of education on household earnings. While there are illiterates across all income quintiles, on average, the better educated the chief wage earner is, the better-off is the household. For instance, households with a matriculate breadwinner earn Rs20,064 a month, 39% higher than households where the chief wage earner has a primary school education. Similarly, households where the chief wage earner is a graduate earned 34% more than households where the breadwinner has just cleared 10+2.

·         Not only are those at the bottom of the income distribution poorly educated, even those in the middle of India’s income distribution have very little schooling, suggests the survey. It shows that “Middle India” (those located between the 20th and 80th percentiles of income distribution) is largely composed of those who lack a high-school education. Households with an illiterate breadwinner constitute 25% of Middle India, while 47% of households in Middle India are those where the breadwinner has just completed primary schooling. The average household income of Middle India is Rs13,636, of which 74% is spent on routine consumption expenses. The largest section of Middle India (37%) lives in underdeveloped rural areas.

·         Only a small fraction of middle India (6%) lives in the metros.










Men vs Women in India/ Gender Economic Equality at work

·         According to various surveys, the pay gap is estimated to vary anywhere between 19% and 27%. But on a closer look, the difference is far less, finds a recent global report.

·         Indian men, overall, earn an average 18.8% more than women. But on comparing the salaries of men with women at the same job level, the same company and in the same function, the study shows that men earn only 3.5% more than women.

·         The global study analysed gender and pay of about eight million employees in 33 countries, including 57,000 employees in India.


·         So just where is that huge pay gap coming from then?

·         It exists partly because there are fewer women in better paying job functions and industries such as science, technology, engineering—all of which pay above average, and are very male-dominated.

·         Lesser-paying sectors such as hospitality and tourism are women-dominated. This pushes the overall average male salary above the average female salary, resulting in a wide average pay gap, said Frost.

·         “Getting more women into these higher-paying functions and industries will push up average female salaries, and help to close the overall pay gap,”

·         The other reason is also the lack of women in senior functions and in leadership positions.

·         Globally, Hay Group’s research found that women make up 40% of the workforce for clerical jobs, but only account for 27% of manager roles and 17% of executive-level jobs.

·         In India, that number is worse—only 10% of managers are women and 5% of women hold executive-level jobs.

·         But it is also important to note that the study considered only the base salaries when comparing the pay of men and women.

·         Experts, believe that not including variable pay does not give the complete picture as variable pay accounts for a significant part of the compensation.

·         Job site released a report that said the gender pay gap varies as much as 34.9% in the manufacturing sector to 17.7% in the banking, finance and insurance sector.

·         In India, women account for only 23-24% of the total labour force and generate a mere 17% of the share of the gross domestic product (GDP), a 2015 McKinsey Global Institute study found.

·         This figure is far below the global average, where female workers generate 37% of the world’s GDP.

Regional Disparities In Andhra Pradesh

·         Several development paradigms, including the Millennium Development Goals(MDGs) and the more recent Sustainable Development Goals(SDGs), emphasize reduction of poverty in all its dimensions. Poverty alleviation continued to be the central objective of state and central government initiatives. While poverty has been interpreted and measured by experts in several methods, various dimensions of poverty have been discussed in the recent past. Broadly, poverty is a state where a person is unable to maintain a minimum socially accepted level of standard of living.

·         Several Committees and expert groups have studied the poverty measurement methodologies in the past. The recent expert group under the Chairmanship of Prof. Suresh D. Tendulkar recommended using poverty lines which are substantially higher than earlier ones. As per the latest estimates of the Planning Commission released in July 2013 for the year 2011-12, the poverty ratios for rural and urban areas of united Andhra Pradesh were 10.96% and 5.81% respectively and combined ratio stands at 9.20%. The corresponding figures for All India during the same period were 25.70%, 13.70% for rural and urban areas and the combined was 21.92%.

·         Andhra Pradesh enjoys the legacy for introducing and implementing innovative poverty alleviation programmes. Apart from general economic policies, targeted poverty alleviation programmes for women’s empowerment, providing housing and other infrastructure like pensions, land distribution and health insurance helping the poor in various dimensions. Increasing budgetary allocations, improving delivery systems in poverty alleviation programs and effective monitoring can help reduce severity of poverty.

·         NITI Aayog has categorized the states into five classes based on their relative poverty head count positions in 2011-12 with scales of <10%, 10-20%, 20-30%, 30-40% and 40%. Andhra Pradesh in terms of urban poverty is placed in the range of where as in rural it is in 10-20%.

·         The Labour Force Participation Rate (LFPR) is defined as the number of persons in the labour force per 1000 persons. Labour Force Participation rates for both rural and urban areas in Andhra Pradesh were higher compared with all India levels.

·         The number of persons employed per 1000 persons is known as Work Force Participation rate (WFPR). The work force participation rate per 1000 persons is based on current daily status.


·         The National Sample Survey Office (NSSO) provides Unemployment estimates on the basis of the Quinquennial surveys. Persons are considered unemployed, if he/she was not working, but was available for work for a relatively long time during the reference period.

·         Unemployment rate is defined as the number of persons unemployed per 1000 persons in the labour force. This in effect gives the unutilized portion of labour force. It is a more refined indicator of unemployment in population than the proportion of unemployed, which is nearly the number of unemployed per 1000 persons in the population as a whole.

·         After an initial rise in the rural and urban unemployment rates between 1993-94 to 1999-2000 in Andhra Pradesh, there has been considerable moderation in the rural and urban unemployment rates from 1999-2000 to 2004-05. However, while in urban areas declining unemployment trend continued till 2009-10, it again went up by 2011-12. The rural unemployment increased quite alarmingly during the period 2004-05 to 2009-10 and remained at the same higher level in 2011-12.

Government measures to Improve Economic disparities through Skill Development

·         The Andhra Pradesh State Skill Development Corporation (APSSDC) is an implementing arm of Skill Development entrepreneurship and Innovation department. APSSDC was set up to skill 2 crore people in Andhra Pradesh in next 10 – 15 years with a vision to be the best state in India and to be competing with the best in the world by 2022, when India celebrates its 75th year of Independence and to achieve status of fully developed state. The mission of the department is to skill 20 million people in 15 years by meeting skilled human power demands of all missions and shape Andhra Pradesh as a skilled workforce and knowledge hub for the world. The role of the Skill development department is to bring in expertise, training of trainers, legislation / policy, rope in placement/ staffing agencies, explore opportunities outside state/country, coordinate with NSDC/GoI, comprehensive portal, CSS funds, coordinate / support skill requirements of 7 Missions, establish state chapter of sector skill councils. In the set up phase it has been planned for scaling up of operations process and procedures, pilot studies for new innovative programmes, kick start training programmes and running existing ones. In the growth phase, scaling up and improving efficiency of existing programmes and implementing new innovative programmes out of the pilots are being aimed. Thus target from 2015-16 to 2019-2020 is projected at 50 lakh at the rate of 10 lakh per year and 2 crore in fifteen year target i.e. by the year 2039.

·         A committee with District Collector, DRDA, APSSDC, EGMM, CSR, Vice Chancellors, industries, private etc., has been constituted and the functions of committee is to prepare district action plan, coordinate training programs, identify and provide idle infrastructure, 500/1000 capacity centre under PMKVY, coordinate requirements of local Industries, operationalisation of YTCs and other training spaces. APSSDC central campus, integrated school (with vocational skills), Skill development university, training of trainer institute (with residential facilities),manufacturing and R&D setup, industrial centres of excellence, entrepreneurship and incubation facilities, residential campus with capacity to host 20,000 trainees, land-intensive training programs, industrial consortiums and state-of-art sector skill councils.

·         The Skill development mission also has linkage with Mission coordinators/constituent departments and nominate a coordinator, articulate demand for skilled workforce, earmark a portion of the budget for skilling activities. A ‘career counselling helpline’ is being launched as a statewise service. This call centre is planned at Parivartan bhavan, Guntur district and APSSDC has tied up with Nirmaan vidya helpline for this service. Udyog ratham is a mobile van planned and is a unique and easily accessible mode for candidates to register for job and skill training and for employers to offer jobs.

·         The activities managed by the skill development mission are:

·         Siemens centres:

     There is big gap in employability levels of engineers and diploma holders due to less exposure to hi-end, industryrelevant technology.

     Focus on automotive, heavy engineering, aerospace, energy, naval and other manufacturing sectors.

     Unique Hub & Spoke cluster model with plan for 6 clusters in the state, with total 36 centres

     Each geographic and industrial region is being covered and placement opportunities are available across the globe. These centres are to be operationalised by April 2016

·         ESDM – DEITY - APSSDC has been designated as the State Implementing Agency (SIA) for the skill training in the ‘Electronics System Design and Manufacturing (ESDM) sector, a scheme of department of Electronics and IT, Govt of India. 23 training partners have been selected with 14 job roles under this scheme by APSSDC with an initial target of around 1500 youth.

·         IT – Sector - MoU signed with NASSCOM for launching courses in ‘Cyber Security’ and ‘Data Analytics’, MoT program for the faculty members of 35 universities/colleges are under progress. Tribal Welfare Department MoU signed with Tribal welfare department to train tribal youth in “18” youth training centres (YTCs), conducted “Bhavitha” program and mobilised around 2500 youth.

·         Jain Irrigation - Drip irrigation service and maintenance entrepreneur being developed

·         UN Women - Training housemaids for overseas placement. ToT organized logistic sector skill council - logistic trainings - skilling activities in the ports, airport terminals, warehouses, capital region project etc