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SBI Report on Income Inequality in India


Why is it in the news?

  • The latest report from SBI Research indicates a noteworthy reduction in income inequality in India, suggesting positive trends towards upward mobility and the expansion of the middle class.
  • The findings shed light on various economic indicators that contribute to a more balanced income distribution.

Key Findings of the Report

  • The report, drawing on Central Board of Direct Taxes (CBDT) data, highlights a continuous expansion in the Income Tax base.
  • In the Assessment Year 2022-23, the number of tax filers increased to 74 million, up from 70 million in the previous year.
  • The Gini Coefficient, a crucial measure of income inequality, has witnessed a decline. From 0.472 during the Assessment Year 2014-15, it has reduced to 0.402 for the Assessment Year 2022-23.
About Gini Coefficient

路聽聽聽聽聽聽 The Gini Coefficient, derived from the Lorenz curve, serves as an indicator of income or wealth inequality.

路聽聽聽聽聽聽 It ranges from 0 (perfect equality) to 1 (perfect inequality), where higher values indicate higher levels of inequality.

路聽聽聽聽聽聽 A Gini Coefficient of 0.402 for AY 2022-23 suggests a move towards a more equitable income distribution in India.

 

 

  • The share of top earners, particularly those with incomes exceeding Rs 10 crores and Rs 100 crores, has seen a decrease over the period from 2013-14 to 2020-21.
  • A significant factor contributing to the reduction in income inequality is the observed upward mobility.
  • More than 36% of individuals who were initially in the lowest income bracket in FY14 have transitioned to higher income levels. This transition resulted in a notable 21% increase in their earnings from FY14 to FY21.
  • The report indicates a positive trend in the rising participation of females in the labour force. This contributes to a more inclusive and diverse workforce.
  • The report points out evident changes in income levels for Micro, Small, and Medium Enterprises (MSMEs).
  • Additionally, evolving consumption patterns post-Covid-19 challenge the conventional notion of K-shaped growth, suggesting a more nuanced economic landscape.
K-shaped Recovery聽

路聽聽聽聽聽聽 It occurs when an economy recovers unevenly and there鈥檚 a separate trajectory for two segments of the society.

Examples:

路聽聽聽聽聽聽 Industries like technology, retail, and software services have recovered while the travel, entertainment, hospitality, and food services industries have continued to decline.

路聽聽聽聽聽聽 India鈥檚 stock market is healthy while millions have lost their jobs and private consumption has collapsed.

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