Letter to BS: Dissecting income distribution in India over past 36 years

This refers to Parthasarathi Shome’s article “Income distribution: Recent developments” (October 17) in which he has discussed income distribution in India over the last 36 years.

It is a valuable article which establishes that over the last three to four decades, in spite of slogans of socialistic pattern of society, growth with equality, Garibi Hatao, Antyodaya etc. and despite change of the ruling party/coalition from the Congress to Janata Dal, United Front and the Bharatiya Janata Party, the end result in terms of income distribution is really depressing as the tables given with the piece depict.

More publicity needs to be given to this shameful deterioration in the income share of the bottom 90 per cent and the staggering increase in the share of the topmost groups of 0.001 per cent or 0.01 per cent. Is there any remedy in these days of liberalised, free-enterprise economy run on the basis of oligopoly and crony capitalism? Probably a combination of trade unionism, environmentalism, social and political activism demanding higher minimum wages, better education and health services, social insurance including allowances for the jobless/temporarily unemployed and some variant of the universal basic income could result in some amelioration for the bottom 90 per cent.

His last paragraph on the narrow middle class was also illustrative. His criterion for determining who among the populace are below middle-class seems reasonable. If we exclude top 3-4 per cent as rich, then the middle class will consist of roughly 6-7 per cent of the population. This accords with five/six year old estimate of the National Council of Applied Economic Research.

The question is how many more decades will it take for India to have 70 per cent of its population in the middle-class instead of 7 per cent, at a monthly family income between Rs 40, 000 and Rs 90, 000 (at prevailing price levels). Will it be three or four decades or more? That is more important than when India will become the third-largest economy in the world in terms of purchasing power parity or whether India is the fastest-growing economy in the world.

Bipul Bhattacharya,  Former chief secretaryKarnataka

Letters can be mailed, faxed or e-mailed to: 

The Editor, Business Standard

Nehru House, 4 Bahadur Shah Zafar Marg 

New Delhi 110 002 

Fax: (011) 23720201  •  E-mail: letters@bsmail.in

All letters must have a postal address and telephone number