Inequality rises in cities and dips in rural India, a plan panel study

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.

Updated on: Jan 22, 2013, 20:51:13 IST

Hindustan Times | By Chetan Chauhan, New Delhi

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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".

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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