Inequality rises in cities and dips in rural India, a plan panel study | delhi | Hindustan Times
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Inequality rises in cities and dips in rural India, a plan panel study

delhi Updated: Jan 22, 2013 20:51 IST
Chetan Chauhan
Chetan Chauhan
Hindustan Times
Chetan Chauhan

Inequality between the richest and the poorest has risen at a faster rate in cities as compared to rural India raising questions over the impact of UPA government's inclusive growth agenda.

It was believed that benefits of liberalisation unveiled in 1992 were more for urban India because of increase in incomes for all classes as compared to rural India.

The myth seems have been broken by a new Planning Commission study which found that the incomes of the rich grew at a much faster rate than the poor in cities resulting in rise in inequality.

Inequality of wealth societies is measured using the Gini ratios -- developed by Italian statistician Corrado Gini in 1912 --- methodology where zero means perfect equality whereas one stands for highest inequality.

A plan panel's group headed by SR Hashim, set up to define poverty in urban areas, employed Gini ratio on the National Sample Survey Office (NSSO) per capita monthly consumption data to measure the inequality over short (2004-05 to 2009-10) and long (1973-74 to 2009-10) periods.

For the shorter period, which quantifies the regime of the UPA government, the Gini ratio for rural India declined from 0.30 in 2004-05 to 0.29 in 2009-10 whereas the same for urban India increased from 0.37 to 0.38 in the same period.

In simpler terms, it meant that inequality dipped in rural areas whereas it increased in urban India.

The NSSO data showed that per capita consumption expenditure of the top 10 % of the population in urban India was 10.11 times of the bottom 10 % of the population in 2009-10, which was 8.41 times in 2004-05, another indication of the widening income gap between rich and poor.

If the data is compared for longer duration (1977-98 to 2009-10), the Gini ratio for urban India has steadily increased from 0.27 to 0.38 whereas for rural areas it has shown marginal dip because of the gains during the UPA regime.

What the study describes as a "disturbing trend" was disparity in incomes in urban India widening at a faster rate than in rural India. "The inequality in terms of consumption expenditure has widened in urban areas as compared to rural areas," the study said.

The group also said that high economic growth in the country over the last decade was expected to result in sharper fall in poverty in urban India as compared to rural India.

But, the reverse happened. The poverty in rural India declined by 8 percentage points between 2004-05 and 2009-10 as compared to just 6.1 percentage point fall in urban poverty numbers.

A prime reason for lower poverty alleviation in urban areas was lack of skills among poor to get decent income jobs resulting in many becoming vulnerable to "uncertain urban environment".