INCOME INEQUALITY IN INDIA
MADHURA SWAMINATHAN AND VIKAS RAWAL
• There is an impression – both within India and outside – that India is a country of relatively low income inequality.
• India’s Gini index more favourable that those of comparable countries like South Africa, Brazil … China, and even the USA, which are otherwise ranked very high in human development.
• India 36.8 • South Africa 57.8• Brazil 55• China 41.5• USA 40.8
Source: HDR 2010 cited in Economic Survey 2010-2011
• Income versus expenditure inequality
• Comparing non-comparables, like tea and rice
• Inequality in expenditure less than inequality in incomes
• Savings of rich households
• Expenditure of poor households (dis-saving)
• Levels versus trends
INCOME DATA FROM NCAER
• National Council for Applied Economic Research (NCAER)
• 1993: covered 16 States and 35,130 households
• 2005: covered all States and 26,734 rural households and 14,820 urban households
• Estimates of income inaccurate
• Aggregated (recall problems)
• Non-standardised questions
• Consistency across households
• Gini for rural incomes was 0.46 in 1993-94 and 0.50 in 2004-05 (Azam and Shariff 2009)
• Gini for rural incomes was 0.54 in 2004-05 (Vanneman and Dubey 2010)
VILLAGES SURVEYED IN 2006 AND 2007
Table 1 Location of survey villages
VILLAGE DISTRICT STATE AGROECOLOGICAL TYPE
ANANTHAVARAM
GUNTUR ANDHRA PRADESH
PADDY DOMINATED AREA
BUKKACHERLA ANANTAPUR ANDHRA PRADESH
DRY AND DROUGHT PRONE, GROUNDNUT AREA
KOTHAPALLE KARIMNAGAR ANDHRA PRADESH
GROUND WATER IRRIGATED, MULTI-CROP
HAREVLI BIJNOR UTTAR PRADESH
100% CANAL IRRIGATED, WITH GROUND WATER,
WHEAT-SUGARCANE
MAHATWAR BALLIA UTTAR PRADESH
GROUND WATER IRRIGATED, WHEAT PADDY ROTATION
WARWAT KHANDERAO
BULDHANA MAHARASHTRA
UN-IRRIGATED, COTTON REGION
NIMSHIRGAON KOLHAPUR MAHARASHTRA
IRRIGATED SUGARCANE AND MULTI-CROP SYSTEM
25F GULABEWALA
SRIGANGANAGAR
RAJASTHAN CANAL AND GROUNDWATER IRRIGATION, WITH COTTON,
WHEAT AND MUSTARD
Methodology• Income includes all cash and kind incomes.
• All incomes are net of costs incurred by the households in the process of production and income generation.
• The surveys used a comprehensive definition of incomes, and included detailed modules on incomes from crop cultivation, from animal husbandry and from wage labour, as well as from salaried employment, non-agricultural self-employment, rent and other transfers.
• A total of 20 sources of income were used to construct the final income variable.
• Survey years: 2005-06 (5 villages) and 2006-07 (3 villages)
• All incomes at 2005-06 prices
Table 2 Mean and median annual household incomes (in Rs)
VILLAGE STATE YEAR MEANMEDIA
N
ANANTHAVARAMANDHRA PRADESH
2006 59,173 25,629
BUKKACHERLAANDHRA PRADESH
2006 36,572 19,517
KOTHAPALLEANDHRA PRADESH
2006 33,987 22,309
HAREVLI UTTAR PRADESH 2006 70,477 26,575
MAHATWAR UTTAR PRADESH 2006 31,237 19,895
WARWAT KHANDERAO
MAHARASHTRA 2007 58,115 31,488
NIMSHIRGAON MAHARASHTRA 2007 69,074 40,293
25f GULABEWALA RAJASTHAN 2007149,77
438,430
Table 3 Mean per capita income, study villages in Rs per annum at 2005-06 prices
Village (State)Year of survey All
Ananthavaram (AP) 2005-06 16,676
Bukkacherla (AP) 2005-06 9,536
Kothapalle (AP) 2005-06 9,438
Harevli (UP) 2005-06 11,657
Mahatwar (UP) 2005-06 4,487
Warwat Khanderao (MAH) 2006-07 11,108
Nimshirgaon (MAH) 2006-07 13,819
25 F Gulabewala (RAJ) 2006-07 26,991
Table 4 Gini coefficients of per capita income, by village (in per cent)Village Persons
Ananthavaram 60.2
Bukkacherla 53.9
Kothapalle 56.5
Harevli 59.8
Mahatwar 51.6
Warwat Khanderao 53.1
Nimshirgaon 49.1
25 F Gulabewala 68.6
Note. These are adjusted Gini coefficients, following Chen, Tsaur and Rhai (1982).
There were substantial variations across villages, although the common feature of the three villages with higher than average inequality was that they were canal-irrigated villages.
Table 5 Gini coefficients of per capita income, selected countries
Country/Region
Gini coefficient of per capita income
(%)
Slovak Republic 19.5
Paraguay 62.3
Latin America 56.0
Europe 36.0
Japan 27.1
Former Soviet Union countries
34.4
China* 36.0
India* 30.0
Palma (2006) and *from ESCAP Yearbook 2009.
Table 6 Distribution of per capita income by decile, study villages in per cent
DecileAnanthava
ramBukkache
rla
Warwat Khander
aoNimshirgao
n
25 F Gulabew
ala
1 0.43 -0.37 1.12 1.80 0.64
2 1.64 2.03 2.41 2.65 1.06
3 2.60 2.95 3.25 3.47 1.41
4 3.42 4.15 3.99 4.41 1.88
5 4.39 5.91 5.11 5.36 2.49
6 5.94 6.89 6.65 6.77 3.66
7 7.68 9.16 8.58 8.95 6.06
8 9.92 11.93 11.61 12.55 10.52
9 14.28 17.56 16.29 16.54 18.36
10 49.70 39.78 40.99 37.50 53.92
All 100.00 100.00 100.00 100.00 100.00
D10/D9 3.48 2.27 2.52 2.27 2.94
Figure 1. Kernel density plots of per capita incomes for persons belonging to Dalit and Other households, Ananthavaram, Andhra Pradesh
Figure 2. Kernel density plots of per capita incomes for persons belonging to Dalit and Other households, Bukkacherla, Andhra Pradesh
Figure 3. Kernel density plots of per capita incomes for persons belonging to Dalit and Other households, 25 F Gulabewala, Rajasthan
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