DMPQ: Wealth inequality is a serious concern for the Government around the world. What are the reasons for wealth inequality in India? List down the consequence of wealth inequality.

According to a report of Oxfam international , India’s richest now hold 58% of country’s wealth. 57 billionaires in the country have the same wealth as that of the bottom 70% population, Wealth inequality is a serious issue. The reasons for wealth inequality are:

  • Growing incidence of Tax avoidance and Tax evasion
  • Existence of black economy. Most of the real estate business take place through black money only.
  • Major chunk of the population working in low pay sectors , unremunerative agriculture.
  • Crony capitalism is also one of the reason . Policies are tailor made to serve the needs of few corporate houses only.

Widening inequality has serious repercussions:

  1. Lower tax/gdp ratio. Less money for social sector expenditure. Low rate of social capital formation.
  2. Continuing socio- economic backwardness and demand from other section to be included in backward category status.
  3. Exploitation of the poor and the vulnerable.
  4. Increasing corruption, crime and insecurity in the society.
  5. Free market envt is not available for small businesses. Growth of MSME sector get hampered.
  6. Demographic dividend may turn into liability.
  7. Farmer suicides are increasing.


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