Eliminating Income Inequalities in India: Top 7 Measures

The following points highlight the top seven measures to eliminate income inequalities in India. Some of the measures are: 1. Land Reforms and Redistribution of Ceiling Surplus Land 2. Control over Monopolies and Restrictive Trade Practices 3. Social Security Measures and Others.

Measure # 1. Land Reforms and Redistribution of Ceiling Surplus Land:

In India, income inequalities are mostly resulted from the concentration of agricultural land in the hands of a few big landlords. The Zamindary system prevailing in our country has created a system of absentee landlords in the farm sector who appropriated a major portion of the agricultural produce by exploiting the farmers.

After independence, various legislative measures were introduced for abolishing the system of absentee landlords and other intermediaries and imposing ceiling on land holdings. But all these measures failed to achieve the desired level of success. Moreover, the redistribution of agricultural land has also limited role in respect of poverty alleviation.

In this connection, Dandekar and Rath observed, “However simple it may appear, it is futile to try to resolve the problem of rural poverty, in an overpopulated land, by redistribution of land which is in short supply……………………….. (Further) any drastic lowering of the ceilings and redistribution of the surplus land to the landless workers will serve no useful purpose.”

Measure # 2. Control over Monopolies and Restrictive Trade Practices:

In order to reduce the income inequalities, the control of monopolies is considered as an important step. Initially, no attempt was made to control the growth of monopoly houses. It was only in 1969, the Monopolies and Restrictive Trade Practices Act was passed which made necessary provision for the control of monopolies and for prohibiting restrictive trade practices.

Accordingly, Monopoly and Restrictive Trade Practices Commission was formed to make necessary judgment on the erring enterprises. But existing procedure and even the industrial licensing machinery had failed to protect the interest of small enterprises as these measures were found rather inadequate and ineffective.

Moreover, under the present regime of liberalisation of the industrial sector, the monopoly trends are likely to be strengthened further and thereby economic disparities may aggravate further.

Measure # 3. Social Security Measures:

Social security measures for the workers are considered as an important step towards reduction of income inequalities. India is not having a comprehensive network of social security system although the country has adopted some social security provisions for the workers engaged in the organised sector.

Workmen’s Compensation Act for providing compensation in case of any injury to industrial workers, these are Maternity Benefit Act for Women Workers and Employees Provident Fund Act for providing the benefit of provident fund to the workers and other employees engaged in organised industries.

Again the most comprehensive social security measure in the country is the Employees State Insurance Act which provides the insured workers various facilities like medical benefits, disability benefits, sickness benefit, maternity benefits and also benefit to dependent.

All these measures are playing important role in poverty alleviation especially in urban areas. But the rural areas and the unorganised sectors remain mostly untouched. Even the unemployment allowance and the old age pension, which are considered as vital measures for removing poverty, are almost absent in India.

Measure # 4. Employment Programme and Wage Policies:

With the growing menace of unemployment problem in India, the Government of India has introduced some special employment programmes since the Fourth Plan onwards in order to provide some relief and scope for gainful employment to unemployed.

These programmes include Crash Scheme for Rural Unemployment, the Drought Prone Areas Programme, Food for Work Programme, self employment schemes for engineers, employment scheme for educated unemployment etc.

All these programmes were short lived and ad-hoc in nature. During the Sixth Plan period, the Integrated Rural Development Programme (IRDP) was initiated in 1978-79 and after that National Rural Employment Programme (NREP), Rural Landless Employment Guarantee Programme (RLEGP) were also introduced.

All these programmes were mostly guided by the objective of poverty alleviation in rural areas through generation of gainful employment opportunities. Again since April 1, 1989, the NREP and RLEGP were merged into a new programme, namely, Jawahar Rojgar Yojana (JRY).

Although a huge amount of money is regularly being spent in India every year on these programme but the implementation and achievement of these programmes are not at all encouraging.

Moreover, the wage policy can also play an important role in raising the income of the poorer sections of society. Although the statutory minimum wage provision is being made in India but it has benefitted mostly the 10 per cent workers engaged in the organised sector keeping the remaining 90 per cent of working population almost untouched.

Measure # 5. Minimum Needs Programme:

Development economists are arguing to introduce the minimum needs programme in developing countries since the early part of 1970s. Meeting basic needs of lower sections of society is also considered as an important step towards elimination of income inequalities.

Realising its importance, Indian planners have introduced the Minimum Needs Programme since the Fifth Plan in order to alleviate poverty and to attain higher growth rate.

The Sixth Plan documents observed, “The Programme is essentially an investment in human resources development. The provision of free or subsidised services through public agencies is expected to improve the consumption levels of those living below the poverty line and thereby improve the productive efficiency of both rural and urban workers.

This integration of social consumption programmes with economic development programmes is necessary to accelerate growth and to ensure the achievement of plan objectives.”

Measure # 6. Upliftment of the Rural Poor:

Programmes for the upliftment of the rural poor have been considered as an important step towards poverty alleviation and reduction of income inequalities.

In the early part of economic planning in India, such programmes include:

(a) Resource and income development programme,

(b) Special area development programme and (c) Works programme for creation of supplementary employment opportunities.

But all these programmes failed to make much headway in achieving its objectives. The Planning Commission observed, “In practice, therefore, these programmes were reduced to mere subsidy giving programmes short of any planned approach to the development of the rural poor as an in-built process in the development of the area and its resources.”

During the Sixth Plan, two anti-poverty programmes, i.e., Integrated Rural Development Programme (IRDP) and National Rural Employment Programme (NREP) were introduced and these two programmes had considerably benefitted the rural poor by creating production assets as well as eliminating unemployment in the rural areas.

Again since 1st April, 1989, the NREP and the RLEGP were merged into a new programme known as Jawahar Rozgar Yojana (JRY), which is playing an important role in uplifting the conditions of rural poor.

Measure # 7. Taxation:

Designing the tax structure has been considered as an important strategy towards reduction of income inequalities in a country like India. Although progressive nature of Indian tax system has been designed to check income inequalities and concentration of wealth but it has failed to make much headway and also to monitor the major source of such inequality.

Amaresh Bagchi has rightly observed. “The sharpness of progression in the nominal rates is, however, no guarantee of the redistributive effect of tax. Much depends on the extent to which the tax base comprehends the various ingredients of economic power.”

In conclusion, it can be finally observed that whatever measures were undertaken by the government in the last four decades, these are having a very little impact on reduction of income inequalities and poverty in India. Under the present system of ownership of private property and law of inheritance it is rather foolish to think in that term.

Rather the income inequalities are gradually widening year after year. Ashok Rudra in this connection observed, “the government’s price policy, investment policy and production policy all go to increase inequality among different sections of population in the matter of their standard of living.”

But the present policy adopted by the government in recent years as reflected by its various aforesaid measures and the increasing consciousness of the poor and deprived sections of the society have been able to create some impact in arresting the growing trend of income inequalities in India, if not to reduce it considerably.

Recently, Prime Minister Manmohan Singh, while inaugurating the first conference of chairpersons of district planning committees on January 16, 2009 observed that the challenge of reducing inequity and inequality as the most important issues before the country and said focus should be given on meeting core development needs.

Accordingly, he observed that “To my mind, the most important issues before us are to meet the challenge of reducing inequity and inequality. We should focus on meeting core development need, essential for human growth.”

He further said that the areas that need attention include combating of disease, eliminating malnutrition, providing safe drinking water, good quality universal education, providing people with skills and job opportunities and preserving environment.