Lag in gauging inequality

Anjela Taneja | Updated on July 07, 2021

India must conduct more income/wealth surveys

In January 2021, Oxfam India’s report ‘The Inequality Virus’ showed that the wealth of India’s 100 billionaires increased by ₹12,97,822 crores since March 2020 while millions lost their jobs due to the economic crisis. In January 2020, the report also revealed that 1 per cent hold more than four times the wealth held by 953 million people who make up the bottom 70 per cent of the country’s population.

However, India has consistently failed to maintain and update official data on income and wealth inequality. NITI Aayog’s third 'SDG India Index and Dashboard 2020-21', launched in June 2021, has again omitted true metrics of income inequalities. In February 2020, the Minister of State for Finance Anurag Thakur informed parliament that data on income/wealth is not maintained by the government.

India remains one of the countries that has not been able to report on the SDG target of the rate of growth of the poorest 40 per cent households since the goals were ratified.

There are three sets of measures of inequality — consumption, income and wealth. Consumption inequality is generally tracked through household surveys; these tend to not capture well the consumption of both richer households and the poorest who are often not part of survey samples. While the measure does capture income inequality, it fails to give a sense of assets available with families.

Wealth inequality looks at the assets and debts of households. The most frequently used metric of income inequalities is the Gini Coefficient which reflects the extent of inequality, varying from zero (in a context of perfect equality) to one (when one household accounts for all the consumption in the country).

India’s consumption Gini is based on the NSSO Consumer Expenditure Survey (68th Round) released in 2011-12. The Income Inequality Gini draws on the Integrated Household Survey, 2011-12. Data for the Wealth Gini is derived from the All-India Debt and Investment Survey (NSS 70th round) dating back to 2012.

As we reach the end of a decade, since either dataset was updated, it might be time to flag the need for a rethink of how Indian inequality statistics are collected and organised.

How have other countries fared?

India’s Gini Index in the World Bank’s dataset has not been updated since 2011. At the time of writing, 140 countries have more updated information on income inequalities thean India. This includes 20 countries that have updated income inequality data annually and 31 countries which have missed one data point. Seventy-four74 countries appear to be collecting evidence on average at least every alternate year.

The list of countries with more updated data includes many of our neighbours, including Bangladesh (last data available for 2016), Pakistan (2018), Myanmar (2017), Sri Lanka (2016), Bhutan (2017) and Maldives (2016). Only Nepal has less updated data (2010). In contrast, Sri Lanka, Myanmar and Bhutan have 2 two data points and Pakistan has collected evidence pertaining to it thrice.

India is also a laggard in its data collection on this issue among all other BRICS countries, including Brazil (2019), China (2016), Russia (2018) and South Africa (2014). Brazil has been maintaining this data annually and Russia has seven data points in the intervening eight years

The NITI Aayog’s latest SDG report did not include data on income inequality while addressing India’s performance on SDG 10. It used seven indicators. In 2019, it used nine indicators. In 2018, it used only four indicators to calculate the performance, again excluding a measure of income inequality. While it is not clear whether it is cherry picking evidence to arrive on a desired scope, what is clear is that this makes the datasets not comparable across the years. These inconsistencies need to be addressed to get a full and accurate picture of income inequality in India.

What should be done?

India needs to recognise the importance of addressing rising inequality and put in place mechanisms for its measurement. More data needs to also be disaggregated by income given the clear impact that class has on specific development outcomes. This is not just about collecting of wealth data twice in a decade, but also more consistently tracking the differential impact of specific policies on India’s rich and poor. It would, thus, be important to know the relative access that India’s rich and poor have had to life-saving vaccines. While much of the data collection this year, including the Census, has had to be unavoidably postponed, we need to start more regular collection of data on income and wealth inequality. At the very least, at least two surveys have to be conducted over a 10-year period using a reasonably comparable methodology capturing income and wealth inequalities.

Furthermore, all data thus collected should be made freely available in the public domain and in a timely manner to allow citizens, practitioners and academics to engage with the underlying reality.

Unless India collects timely evidence on income inequality, it will not be able to address it. India’s policymakers need to understand the extent to which their actions are really benefiting India’s rich or the poor who need help most. Indians deserve to know the real extent of the gap between the rich and poor to enable them to take action to address inequality.

If we treasure India’s Constitutional commitment to equality, we must also measure whether we are getting any closer to achieving it.

The writer leads the work on education, health and inequality at Oxfam India

Published on July 07, 2021

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