Karela Fry

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How unequal is India?

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The planning commission continues to make news. The Hindu reports on inequal wealth distribution in India:

Under the Gini Coefficient used, there was a marginal increase in inequality in rural areas from 0.27 per cent during 2004-05 to 0.28 per cent during 2009-10. This meant money was concentrated in a fewer hands. In urban areas, where money had already been with fewer people, the situation deteriorated more sharply, from 0.35 to 0.37.

As per the index ranged on a scale from zero to 1, the ideal situation is zero, indicating perfect equality. But 1 means maximal inequality (all wealth cornered by one person).

Inequality rose sharply in rural areas of even a well-off State like Punjab (0.26 to 0.29), Kerala (0.29 to 0.35), Bihar (0.19 to 0.22) and Madhya Pradesh (0.24 to 0.28) and Assam (0.18 to 0.22). There was no change in Odisha, Gujarat, Karnataka, Tamil Nadu and Uttar Pradesh.

Inequality came down in the rural areas of Goa, Delhi, Maharashtra, West Bengal, Haryana and Chhattisgarh.

Unlike the mixed trend in rural areas, the picture in the urban areas was more horrific. Except in Chhattisgarh, Goa and Tamil Nadu, inequality rose in all other States: Andhra Pradesh, Assam, Bihar, Delhi, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Uttar Pradesh and West Bengal.

Inequality rose rather sharply in urban Kerala (0.35 to 0.40), Uttar Pradesh (0.34 to 0.40), Himachal Pradesh (0.26 to 0.35), Odisha (0.33 to 0.38), Punjab (0.32 to 0.36), Delhi (0.32 to 0.35) and Jammu and Kashmir (0.24 to 0.31).

One may want to understand the methods by which the wealth distribution in India is measured. Tax returns may give some information on incomes, but wealth is notoriously harder to measure. In the absence of this information, one is forced to take the numbers at face value. However, one should not forget the large question mark over the numbers so obtained.

Given all these caveats, how bad is India in comparison with other countries? Bloomberg has the following to say of China:

China’s wealth gap has exceeded the point that triggers social unrest, according to figures revealed by Politburo member Bo Xilai, in a rare disclosure of the country’s income disparity.

China’s Gini coefficient, an index of the income gap, has exceeded 0.46, Bo, the Communist Party Secretary for Chongqing Municipality, told reporters in Beijing today, without giving specifics. The index ranges from 0 to 1 and the 0.4 mark is used as a predictor by analysts for social disturbances.

China’s wealth gap has exceeded the point that triggers social unrest, according to figures revealed by Politburo member Bo Xilai, in a rare disclosure of the country’s income disparity.

The meeting where Bo spoke, held during the annual National People’s Congress in Beijing, highlighted Chongqing’s efforts to reduce the urban-rural income gap during the past five years, encompassing Bo’s tenure. Bo, 62, has reintroduced slogans and songs from the late Chairman Mao Zedong in a bid to re-instill a Communist spirit in a country that still officially adheres to the principles espoused by Karl Marx.

The World Bank’s data for China’s Gini coefficient goes up to 2005 and the country doesn’t regularly publish a nationwide figure. The country hasn’t disclosed an urban coefficient because it had too much trouble getting accurate information from high-income urban families, according to Ma Jiantang, the head of the National Bureau of Statistics.

The US is astoundingly inequitious. Bloomberg reported:

The [Gini] index ranged from 0.207 in Loving County to 0.645 in East Carroll Parish, Louisiana.

Nationwide, the Gini index in 2010 was 0.467. The median Gini for U.S. counties was 0.43. New York County, home to the nation’s largest city, had a Gini of 0.601, slightly less than that of Nicaragua.

The nation’s three most-populous counties — Los Angeles County, Cook County, Illinois, and Harris County, Texas — were also among the highest urban areas in income inequality.

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Written by Arhopala Bazaloides

March 21, 2012 at 3:14 am

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