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Resource centre on India's rural distress
 
 

Why Worry About Inequality in India? -Sumit Mishra

-Livemint.com

Data on incomes and wealth suggest India is far more unequal than official estimates based on consumption expenditure data suggest

Inequality is in the news once again and the news is not particularly good. In a speech last month, Reserve Bank of India governor Raghuram Rajan commented that increasing inequality could be curtailing world demand. Since the rich typically spend a smaller portion of their income compared with the poor—who spend almost all of their income—rising inequality is a threat to aggregate demand in the global economy, Rajan argued.

Rajan belongs to a new generation of economists who are beginning to take inequality more seriously than before. In his famous 2010 book, Fault Lines, Rajan argued that refusal to tackle growing inequality in the US led federal policymakers to encourage the housing boom which eventually led to the great crash of 2008, with disastrous consequences for both the US and the global economy. Rajan has been quite blunt about inequality in wealth and power in India as well.

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