India suffered the biggest blow in at least four decades after lockdown amid the Covid-19 pandemic. The GDP growth rate reached its lowest level in the April-June quarter at 23.9 percent and gave cause for concern about the further increase in income inequality. The pandemic hit the poorer segment of society adversely because they worked in jobs that could not be done remotely while employees were largely isolated due to work from home (WFH). And as the issue of inequality becomes more relevant in the face of an unprecedented lockdown event, the economic survey has a full chapter examining whether inequality and economic growth converge or conflict in the Indian context.
Interestingly, KV Subramanian stated during the press conference to Economic Survey, India’s foremost economic advisor, explored the link between inequality and economic growth by telling a story from the Malgudi days. Well the story is about Swami who is good at math and gets full marks compared to his friend who only got 60 points. Her teacher tries to bridge the inequality by taking 20 Marks away from Swami and giving it to Shankar, which ultimately discourages Swami, who complains to his mother. He argues that the teacher’s increase in class hours would make Shankar do better and fill the void. Subramanian asks whether this kind of equality achieved is desirable.
« Given the level of development of the economy we are in and the debate about inequality in advanced economies, this is a relevant question. Macro-politics are always faced with compromise Therefore, clarity of goals is important for policy making, « Subramanian said addressing the media. He says that income redistribution in India is only possible if the size of the economic pie grows proportionally.
According to the Economic Survey, the relationship between inequality and socio-economic outcomes on the one hand and economic growth and socio-economic outcomes on the other differs in India from that observed in advanced economies. The survey examines the correlation between inequality and per capita income using a range of socio-economic indicators, including health, education, life expectancy, child mortality, birth and death rates, birth rates, crime, drug use, and mental health that both per capita -Income (as an indicator of economic growth) as well as inequality have similar relationships to socio-economic indicators.
« Unlike in advanced economies, India’s economic growth and inequality converge in terms of their effects on socio-economic indicators. In addition, economic growth has has a far greater impact on poverty eradication than inequality. Given India’s stage of development, India must continue to focus on economic growth in order to lift the poor out of poverty by expanding the overall circle e that this political focus does not imply that redistributive goals are unimportant, but that redistribution in a developing economy is only possible if the size of the economy pie grows. «
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