Income Inequality

In the post-reform period, India has witnessed relatively better economic growth compared to the pre-reform period. Higher growth is vouched for, as it enlarges the scope for improving the welfare of the people. Higher growth, however, would be meaningful if the benefits of growth contributed to the well-being of larger sections of people spread across the length and the breadth of the country rather than being confined to a narrower cross-section of the populace or a few specific regions. In other words, the growth process has to be inclusive as the welfare of the people is the prime consideration. The benefits of growth need to be broadly based not only for humanistic concerns but also for the necessary popular support for the sustenance of the growth process. Skewed benefits of growth confined to a particular cross-section of people or to specific regions for a relatively longer period create tensions in the social fabric and would be potential threats to the very growth process. The distributional dimensions of growth thus assume equal, if not greater, importance than growth itself. Hence it becomes imperative that the inequality implications of the growth process be analysed in some detail. A detailed analysis of inequality in the context of present-day India becomes more relevant as the economy has witnessed a new set of economic policies which places greater reliance on market forces. This chapter is devoted to the study of inequality across regions in the post-reform period. To draw a comparative perspective, the scenario with regard to inequality for the pre-reform period is also considered.