INCOME INEQUALITY IN INDIA
MADHURA SWAMINATHAN AND VIKAS RAWAL
• There is an impression – both within India and outside – that
India is a country of relatively low income inequality.
• India’s Gini index more favourable that those of comparable
countries like South Africa, Brazil … China, and even the USA,
which are otherwise ranked very high in human development.
•
•
•
•
•
India 36.8
South Africa 57.8
Brazil 55
China 41.5
USA 40.8
Source: HDR 2010 cited in Economic Survey 2010-2011
• Income versus expenditure inequality
• Comparing non-comparables, like tea and rice
• Inequality in expenditure less than inequality in incomes
• Savings of rich households
• Expenditure of poor households (dis-saving)
• Levels versus trends
INCOME DATA FROM NCAER
• National Council for Applied Economic Research (NCAER)
• 1993: covered 16 States and 35,130 households
• 2005: covered all States and 26,734 rural households and 14,820 urban
households
• Estimates of income inaccurate
• Aggregated (recall problems)
• Non-standardised questions
• Consistency across households
• Gini for rural incomes was 0.46 in 1993-94
and 0.50 in 2004-05 (Azam and Shariff
2009)
• Gini for rural incomes was 0.54 in 2004-05
(Vanneman and Dubey 2010)
VILLAGES SURVEYED IN 2006 AND 2007
Table 1 Location of survey villages
VILLAGE
DISTRICT
STATE
AGROECOLOGICAL TYPE
ANANTHAVARAM
GUNTUR
ANDHRA
PRADESH
PADDY DOMINATED AREA
ANANTAPUR
ANDHRA
PRADESH
DRY AND DROUGHT PRONE,
GROUNDNUT AREA
KARIMNAGAR
ANDHRA
PRADESH
GROUND WATER IRRIGATED,
MULTI-CROP
HAREVLI
BIJNOR
UTTAR PRADESH
100% CANAL IRRIGATED, WITH
GROUND WATER, WHEATSUGARCANE
MAHATWAR
BALLIA
UTTAR PRADESH
GROUND WATER IRRIGATED,
WHEAT PADDY ROTATION
WARWAT
KHANDERAO
BULDHANA
MAHARASHTRA
UN-IRRIGATED, COTTON
REGION
NIMSHIRGAON
KOLHAPUR
MAHARASHTRA
IRRIGATED SUGARCANE AND
MULTI-CROP SYSTEM
SRIGANGANAGAR
RAJASTHAN
CANAL AND GROUNDWATER
IRRIGATION, WITH COTTON,
WHEAT AND MUSTARD
BUKKACHERLA
KOTHAPALLE
25F GULABEWALA
Methodology
• Income includes all cash and kind incomes.
• All incomes are net of costs incurred by the households in the process
of production and income generation.
• The surveys used a comprehensive definition of incomes, and included
detailed modules on incomes from crop cultivation, from animal
husbandry and from wage labour, as well as from salaried employment,
non-agricultural self-employment, rent and other transfers.
• A total of 20 sources of income were used to construct the final
income variable.
• Survey years: 2005-06 (5 villages) and 2006-07 (3 villages)
• All incomes at 2005-06 prices
Table 2 Mean and median annual household incomes (in Rs)
VILLAGE
STATE
YEAR
MEAN
MEDIAN
ANANTHAVARAM
ANDHRA PRADESH
2006
59,173
25,629
BUKKACHERLA
ANDHRA PRADESH
2006
36,572
19,517
KOTHAPALLE
ANDHRA PRADESH
2006
33,987
22,309
HAREVLI
UTTAR PRADESH
2006
70,477
26,575
MAHATWAR
UTTAR PRADESH
2006
31,237
19,895
WARWAT KHANDERAO
MAHARASHTRA
2007
58,115
31,488
NIMSHIRGAON
MAHARASHTRA
2007
69,074
40,293
RAJASTHAN
2007
149,774
38,430
25f GULABEWALA
Table 3 Mean per capita income, study villages in Rs per annum at 2005-06
prices
Village (State)
Year of survey
All
Ananthavaram (AP)
2005-06
16,676
Bukkacherla (AP)
2005-06
9,536
Kothapalle (AP)
2005-06
9,438
Harevli (UP)
2005-06
11,657
Mahatwar (UP)
2005-06
4,487
Warwat Khanderao (MAH)
2006-07
11,108
Nimshirgaon (MAH)
2006-07
13,819
25 F Gulabewala (RAJ)
2006-07
26,991
Table 4 Gini coefficients of per capita income, by village (in per cent)
Village
Persons
Ananthavaram
60.2
Bukkacherla
53.9
Kothapalle
56.5
Harevli
59.8
Mahatwar
51.6
Warwat Khanderao
53.1
Nimshirgaon
49.1
25 F Gulabewala
68.6
Note. These are adjusted Gini coefficients, following Chen, Tsaur and Rhai (1982).
There were substantial variations across villages, although the common
feature of the three villages with higher than average inequality was that
they were canal-irrigated villages.
Table 5 Gini coefficients of per capita income, selected countries
Gini coefficient of per capita income
Country/Region
(%)
Slovak Republic
19.5
Paraguay
62.3
Latin America
56.0
Europe
36.0
Japan
27.1
Former Soviet Union countries
34.4
China*
36.0
India*
30.0
Palma (2006) and *from ESCAP Yearbook 2009.
Table 6 Distribution of per capita income by decile, study villages in per cent
Decile
Ananthavaram Bukkacherla
Warwat
Khanderao
Nimshirgaon
25 F
Gulabewala
1
0.43
-0.37
1.12
1.80
0.64
2
1.64
2.03
2.41
2.65
1.06
3
2.60
2.95
3.25
3.47
1.41
4
3.42
4.15
3.99
4.41
1.88
5
4.39
5.91
5.11
5.36
2.49
6
5.94
6.89
6.65
6.77
3.66
7
7.68
9.16
8.58
8.95
6.06
8
9.92
11.93
11.61
12.55
10.52
9
14.28
17.56
16.29
16.54
18.36
10
49.70
39.78
40.99
37.50
53.92
All
100.00
100.00
100.00
100.00
100.00
3.48
2.27
2.52
2.27
2.94
D10/D9
Figure 1. Kernel density plots of per capita incomes for persons
belonging to Dalit and Other households, Ananthavaram, Andhra
Pradesh
Figure 2. Kernel density plots of per capita incomes for persons
belonging to Dalit and Other households, Bukkacherla, Andhra
Pradesh
Figure 3. Kernel density plots of per capita incomes for persons
belonging to Dalit and Other households, 25 F Gulabewala,
Rajasthan