HYDERABAD: Income inequality if left unchecked will reach a tipping point but no one can predict when. The inequality has been on the rise since economic liberalisation in 1991 and is currently in proportion to the colonial times in India, said Gerry Rodgers visiting professor, Institute for Human Settlements in Hyderabad on Wednesday.
The professor was speaking at Centre for Economic and Social Sciences (CESS) said, demonetisation and Goods and Service Tax too have been contributing factors to inequality in India.
Comparing decades worth of data from the National Samples survey, Gerry explained how income inequality has persisted from the time of India’s independence and is growing in India.
The professor noted that there has been a sharp increase in income inequality in both urban and rural India since the economic liberalisation in 1991.
The 2005 redistribution programmes implemented by the UPA slowed but did not halt the growth of inequality. There has been a drop in absolute poverty but there has been growth in relative poverty that stems out of social and economic constraints. “The main ones is the NREGA and the revision of minimum wages, there were also efforts to revamp public distribution systems,” added Gerry.
Speaking on how Goods and Service Tax and demonetisation contributed to income inequality, he said, “A lot of small businesses were affected by these policies that were brought in without thought, but let’s hope that their negative effects which are short-term will die,”Speaking about how it is almost impossible to predict if there is a tipping point for income inequality, Gerry said, “Brazil in 1960-70shad high but unequal growth.
Income inequality went through the roof. The result, in the 1980s the economy went into a deep dive, would the same thing happen in India? who knows, but the growth in inequality is increasing social strains. Will it reach a point where it will have an adverse effect on growth? There are already indicators that it would have an adverse impact on growth, But no one can tell you when the tipping point is, we can look at Brazil and see their tipping point but nobody there in the 1970s predicted either.”