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Urban and Rural Inequalities in India

The word ‘inequality’ means differences, inadequacy, dissimilarity and unevenness. Speaking of ‘inequality’ among urban and rural population in a society, we talk about the differences in the various aspects of living standards and achievements of the population, In this essay we will discuss the aspects of inequality in an Asian country, India… According to UNU/WIDER study,” causes of increasing inequality are specific to a country, circumstances and a mixture of policies” (page 26)?. We will delve into the numerous reasons that control the economic, social and political facet of inequality in Indian context.

We shall also look into various ways and means that works in minimizing inequality in this society India is a vast country in South Asia with an area of 3,287,263 Km? and a population of 1. 2 billion people (according to Census 2001)?. The rural population consists of 72. 2% and the urban population is 27. 8 %2. The country faces the existence of material inequality in the great divide in rich and poor, social inequality in caste, creed, gender, religion and culture. The political inequality is reflected in the gross neglect of some regions, while other regions rising to national prominence.

The picture of disparity that we find in Indian life today has its roots in pre-Independence Days and has been accentuated to its present form with the evolution of the democracy. With globalization, privatization and new trends emerging in the economy, it is ? UNU/WIDER studies Giovanni Andrea Cornia and Julius Court, Inequality, Growth and Poverty in the Era of Liberalization and Globalization ?census of India. Bringing in new causes that are driving forces of economic disparity. The study made by UNU/WIDER says that,

These ‘new causes’ are linked to the neoliberal economic policy packages and the rushed manner in which economic reform policies have been carried out. Stabilization, structural adjustment and external openness are often helpful, but the extreme nature, scope and speed of the liberalization approach, often in the absence Of adequate regulatory capacity, have had a negative impact on distribution. (pg . 26)? In spite of all the development that is taking place in India, a large share of the population lives below the poverty line ,a total of 26.

10% with rural 27. 09% and urban 23. 62%?. “There is a basic asymmetry between the growth of the National product and the source income of the majority of India’s population”, says Assema Sinha (pg 2)4 in her paper on ‘Globalization rising Inequality and New insecurities in India. ’ The urban Indian Population has seen growth in manufacturing and service sector, increasing the income generation with Globalization. But the rural front is incapable of matching the same income standards due to low wages and low income in the agricultural sector.

The wages being unequal in developed and underdeveloped sectors, being higher in developed regions, adds to the economic insecurities among the poor unskilled people. Increase in the cost of living associated with Liberalization discourages these poor and vulnerable populations to move from backward regions, agricultural bases, to service sectors of urban life. 3 GfK MODE Social Research. 4 Aseema Sinha, Globalization, Rising Inequality, and New Insecurities in India Economic Inequalities are reflected in the low wages of the agri-based rural population.

The wages of the service and manufacturing based urban population in Organized sectors are much higher. Skilled and unskilled workers in the industry contribute directly to rising income inequalities. The recent spurt of growth in Indian Economy is largely aided by service sector growth, development of technology and skill of the population . The rural sector is left behind largely due to unorganized, unskilled and non-English speaking population. Thus rising disparities between wages, sector and skills magnify regional inequalities. Land ownership is an important factor contributing to economic inequalities.

Ownership of the rural Agricultural land is in the hands of few rich farmers or land owners. Majority is landless farmers or laborers who get an in equal share in the farm produce, in spite of their hard labour. It creates a wide gap in the income level of the rural population, making them poorer. Education and learning of skills is a big advantage for urban population . The urban population benefits from knowledge and skills of service economy but the large Agricultural landless and small framers are likely to lose out and grow poorer with rapid urbanization.

The urban literacy male literacy rate is 80, while rural literacy stands at 59 per 100 population?. These indicators clearly point to the discrepancy in advantage, and infrastructure that thrive in the inequality in Indian rural and urban population. Though the growth of the IT sector has been much eulogized, yet it has only amplified the divide in income inequality between poor and rich . urban population and rural population as well. The growing IT sector has brought benefit to Population based in large or developed cities only. Few from rural background have

Found job here due to their lack of skills and training facilities. In the rural as well as poor urban population, it has been found that there is a strong link between average years of education and measured income inequality. The study made by UNU/WIDER point to the fact that schooling from very low levels actually provokes inequality. It is related to the discrepancy in the choice of educational subjects made by the population and the jobs offered by the firms. When the educational level of the population is low, it is the highly educated people, who draw the higher salaries.

Inequalities start declining as more and more educated and skilled people are available in the market. Social Inequality in gender, races, and culture has a negative effect on economic growth. The Gender bias is strongly prevalent in this country. India has a sex ratio of 933? females per thousand males. The Gender bias exists from the family set up to work place. In Indian families, even today the male gender receives more, in terms of quality and quantity. It is the male gender that is the prerogative of the family. The girl child always comes second.

Be it, the daily food, the education, the sharing of household responsibilities, the wages earned at the work place, the share of the responsibilities and duties, everything is Pro –male in this society. As a result the Gender discrimination leading to poorer income among women is taken as normal. This discrimination is stark in rural than urban areas. Infant mortality rate is 56 for males and 61 for females, adding to the gender bias and deprivation prevalent in the society. The social research by GfK MODE indicates the gender disparity index to be . 676?.

Culture and religion play an important role in encouraging or discouraging amassing of wealth, thus providing a basis of discrimination. Indian Caste system is so structured that it verily produces inequality. The most deprived are the scheduled castes and tribes, also known as Dalits in India. The rigid social system produces barriers for them, and makes their existence a daily struggle. They are not allowed to change occupation or harness any other benefit for a comfortable living. They are thus made to believe that, they are destined to lead an inferior life, bereft of the benefits, higher castes enjoy.

New Factors The new factors that have become driving forces of income inequality are financial liberalization, privatization, labour market liberalization, tax policies and transfer system. Technological changes have accentuated higher wages for higher skills and replaced labour. This widens the gap between the low skilled and high skilled workers. The Indian economy faces greater urban & rural inequality with liberalization. Poverty levels in rural areas increases due to insignificant changes in agricultural wages and steep rise in food prices.

The reforms of liberalization brought about changes in labour market. It saw trends of employment becoming informal, decline of wage share of laborers, reduced security of job, and reduction in government jobs. Introduction of indirect taxes (like VAT) has taken the Government policy in a direction that has aided inequality instead progressive and pro poor tax policies. The study made by WIDER/ UNU suggests that higher level of inequality has a negative effect in the capability and effort levels of the workers.

Economies may become less efficient with lower yield, with the erosion of land occupied by land less laborers. High inequality of land assets among the rich land owners and land less laborers affect the economies of the agrarian system. The policies made by government as a populist measure, may fall flat leading to “negative implications for economic efficiency, macroeconomic stability and growth” . UNU/WIDER study (pg. 27)?. The long and short term growth of the economy is affected with the increase of inequality in urban and rural India.

It has been creating political instability in many regions of the country, increasing social tensions; swell the cost of security in landed property and business. Thus it is against growth. Reducing it, possibly will aid to increased development of the economy. Political Inequality in the Indian economy is reflected in the imbalance of growth of the regions. The growth rates are high in the southern states (except Andhra Pradesh), western states of Gujarat and Maharastra and North western regions of Punjab, Haryana and Himachal Pradesh.

The pattern of growth has been consistent in these regions (between 1993-94 and 1999-2000)5. The low growth states form one neighboring region consisting of eastern states of Assam, Orissa and WestBengal. The other group of so-called BIMARU states are Bihar, MadhyaPradesh, Andhra Pradesh, Rajasthan and Uttar Pradesh. 5 The low growth states have low percapita expenditure. Thus there is a clear divergence in growth in average per capita consumption expenditure (APCE)5 in these high growth and low growth states. In Assam and Orissa there has been zero growth APCE between 1993-94 and 1999-2000.

It is important to remember here that Indian Economy had peak economic growth between 1993-94 and 1999-2000 with a healthy GDP of 4%. 5 5 Angus Deaton and Jean Dreze, Poverty and Inequality in India: A Reexamination The agricultural wages are higher in states with higher SDP (state domestic product) 5 in a state like Kerala the real wages are much above the “regression line” (Deaton & Dreze, Pg 22)5 and the labour union in the state has raised the agricultural wages above other Indian states. In comparison the states having higher poverty tend to have lower wages.

It establishes the high correlation of standard poverty index with agricultural wages. Healthy growth of agricultural wages @ 2. 5% per year has led to decline in rural poverty, but in the entire eastern region real wages grew at less than 2% per year. 3 Besides inequality between states, there is an increased in equality in consumption with in the urban sectors in almost all states. With public sector workers being paid much better than agricultural laborers, economic disparities in different occupation group is evident. This phenomenon adds a dimension to rural urban disparities as well.

Before 1993-94 the Gini coefficient of per-capita expenditure in rural urban India was quite stable but it changed in nineties giving rise to divergences and disparities in rural urban population. The study made by Angus Deaton and Jean Dreze in their paper “Poverty and Inequality in India: A Reexamination”, assesses that “the poverty index used as an useful indicator of inadequate purchasing power but on their own do not do justice to the range of deprivations we ought to be concerned with”. 5 They also agree that “recent progress in eliminating poverty and deprivation has been quite uneven in different fields”5

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