What is Income Inequality?
Historical Background
Key Points
10 points- 1.
Measured by indicators like the Gini Coefficient (a value between 0 and 1, where 0 represents perfect equality and 1 represents perfect inequality) and the Palma Ratio.
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Can be caused by factors such as skill-biased technological change, globalization, regressive tax policies, weak labor unions, and lack of equitable access to quality education and healthcare.
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Often exacerbated by the informalization of labor, precarious work conditions, and the absence of adequate social safety nets.
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Leads to various negative consequences including social unrest, reduced social mobility, hindered economic growth, and political instability.
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Government interventions to reduce inequality include progressive taxation, social welfare programs, minimum wage laws, and investment in human capital development.
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The news highlights the widening gap between capital and labor as a key aspect of inequality, where profits accrue disproportionately to capital owners.
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Impacts consumption patterns, savings rates, and overall economic stability, potentially leading to under-consumption and financial crises.
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Often correlated with wealth inequality, which is the unequal distribution of assets (property, stocks, etc.).
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Disproportionately affects vulnerable groups such as women, minorities, and those in the unorganized sector.
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A major challenge for achieving inclusive growth and sustainable development goals (SDGs), particularly SDG 10 (Reduced Inequalities).
Recent Developments
5 developmentsReports by organizations like Oxfam and the World Inequality Lab consistently highlight India's high and rising income inequality, often ranking among the most unequal nations.
The COVID-19 pandemic further exacerbated inequality, with the rich accumulating more wealth while the poor faced significant job losses and income shocks.
Government's focus on inclusive growth and targeted welfare schemes (e.g., PM-KISAN, MGNREGA, PM Jan Dhan Yojana) to address disparities and provide a safety net.
Ongoing debates on the effectiveness of current policies and the need for more robust social safety nets, universal basic income, and labor market reforms.
The rise of the gig economy is increasingly seen as a new driver of inequality due to the lack of traditional benefits, job security, and collective bargaining power for workers.
This Concept in News
2 topicsHigher Education's Role in Reducing Inequality and Boosting India's Economy
13 Feb 2026The news underscores the persistent challenge of income inequality in India, even as the country achieves significant economic milestones. It highlights that economic growth alone is not sufficient to address inequality; targeted interventions are needed. The news applies the concept of income inequality by showing how it manifests in the context of India's economic development. It reveals that increasing access to quality education is a crucial factor in promoting more equitable income distribution. The implications of this news are that policymakers need to prioritize investments in education and other social sectors to ensure that the benefits of economic growth reach all segments of society. Understanding income inequality is crucial for analyzing the news because it provides a framework for evaluating the effectiveness of different policies and interventions aimed at promoting inclusive growth. Without understanding the concept, it's impossible to grasp the full significance of the news and its implications for India's future.
Opposition Criticizes Centre on Inequality, 'Atmosphere of Fear' During Budget Debate
12 Feb 2026This news highlights the political dimension of income inequality. (1) It demonstrates how income inequality becomes a point of contention and political debate. (2) The opposition's criticism challenges the government's economic policies and their impact on income distribution. (3) The news reveals that despite overall GDP growth, the benefits are not reaching all sections of society equally, leading to discontent. (4) The implications are that the government needs to address income inequality more effectively to maintain social stability and political legitimacy. (5) Understanding income inequality is crucial for analyzing the news because it provides the context for the political debate and helps assess the effectiveness of government policies in promoting inclusive growth. Without this understanding, the news would simply be a political squabble without deeper meaning.