InsiderThings

In a report by ADB (Key Indicators for Asia 2007 & 2008), Gini Index Number is quite high for India. These shows how the inequalities are present in our economy .Is this growth that we are expecting from our country.

Income inequality is the subject to worry about or the fairness of opportunity. Are we interested in increasing poor people’s income or give them the opportunity to increase income and helps them to move up in the ladder?

Redistribution seems to be the best way to go but it works only when that redistribution leads the poor into more education and better jobs.

Problems & Solutions

1. Migration from villages to cities, making cities richer than villages.
Why rural people migrate to urban cities? The answer is simple in search of economic gains. This migration makes the urban city richer than rural ones. Can India provide jobs to their rural part? This problem is done slightly by NREGA scheme. But is this the solution? No, quick fix cannot work for long term. Government have to go for feasible fiscal policies like developing manufacturing sector.

2. Status of public school / government schools
The education must be there to solve the problem of illiteracy. SSA done good job on this front. Latest report by ADB shows how India improves on various fronts in term of providing education to public. In most of the parameters set by ADB, India is “on the track “status.

3. Removal of social exclusion
Economic growth favours the educated but the poor lack quality education .This leads them to not getting benefit from these prospects. But the question is how they can come out from this vicious cycle.

Poor does not have money, still they have to pay premium for the most basic services. But how can this possible for them as they do not posses enough sources .If someone spend for them then it is possible that they can spend more on education or health. It can be done by government or by private players. This selection open discussion that which one is better - Is it government backed programmes or government funding to private players?

4. Government health services
India does not have sufficient public health services. This leads the poor to go for private hospitals and pay premium for that. But he can not afford the private hospitals and hence his health deteriorates, income falls and he come under the vicious cycle of poverty.

5. Establishment of more polytechnic courses
India has a huge unskilled labour .How can we take advantage of this? Services industry needs well educated people where most of the rural people fail because of lack of education in public domain.

The solution comes from manufacturing industry. India have good examples where manufacturing done quite well in developing rural areas like Jamshedpur (Tata Steel), Aurangabad (Baja Auto Ltd) and upcoming Rudrapur (Mahindras, Tatas).

Polytechnic institutions provide education in manufacturing field and hence make the rural youth more jobs oriented. This would increase the rural household income and leads to less migration from villages to cities.

6. E-government – use of technology

Introduction of e-government to improve public services leads to transparency and optimization of resources. This makes the government to take immediate steps in improving their effort for the masses.

7. Micro Finance as a Tool - Better access to finance
Work done in the field of Micro – Finance is going to big tool in providing better access of finance to poor people. India have to develop the model like “Gramin Bank “ in our banking system so that people formally come under the net of banking and have better access to finance.

These solutions we discussed above can bring the India on right track if effectively action being taken on.

In Nutshell

1. Equality of opportunity
2. Better access to finance
3. Removal of social exclusion
4. Redistribution of wealth – through public funding of
4.1 Rural education
4.2 Medical availability - Basic Health
5. E-Governance
6. Micro – Finance

Sources:

http://www.indiadevelopmentblog.com/2007/12/inequality-in-india.html
http://www.planetd.org/2007/06/22/income-inequality-in-india/
http://www.planetd.org/2007/08/08/income-inequality-in-asia-growing/
http://indianeconomy.org/2007/08/08/income-inequality-in-asia-ii/
http://www.dhi.nic.in/autopolicy.htm

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