Is India Really a Country of Low Income-Inequality? Observations from Eight Villages
There is a misconception in the literature that income distribution in India is less unequal than, for instance, in China or the countries of Latin America. This misconception is based on a comparison of like with unlike. Studies of income distribution for most countries are based as they should be on household income data, while corresponding studies of income distribution for India are based on household consumption expenditure data, and it is well known that consumption expenditure, by its very nature, is less unequally distributed than income. This paper examines levels of household income inequality in rural India using data from in-depth village surveys conducted in eight villages from four States of the country. Although the data-set is relatively small, the exercise is rather unique because of the lack of regular survey data on household incomes for rural India. The Gini coefficient is used as a summary measure of income inequality. Our estimates show high values of the Gini (close to 0.60) in these eight villages; these are comparable to levels reported for Latin America. Of the eight villages, inequality was relatively high in the three canal-irrigated villages.
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