Under-Reporting Income Inequality Weakens ‘Sabka Saath, Sabka Vikas’

A family gather outside their home destroyed by floodwaters in the village of Pakahan, Bihar, on Oct. 22, 2020. (Photographer: Prashanth Vishwanathan/Bloomberg)

Under-Reporting Income Inequality Weakens ‘Sabka Saath, Sabka Vikas’

BloombergQuintOpinion

The world uses three traditional metrics of inequality – consumption, income, and wealth. Consumption inequality is 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. Income inequality captures inequality in income but fails to give a sense of assets available with families. Wealth inequality looks at the assets and debts of households.

Using Outdated Data To Measure Income And Wealth Inequality

In India, the latest data available on consumption is based on the NSSO Consumer Expenditure Survey (68th Round) released in 2011-12. The Income Inequality data is drawn from the Integrated Household Survey, 2011-12. Data on Wealth is derived from the All-India Debt and Investment Survey (NSS 70th round) dating back to 2012. All of these are now a decade old. It is time to rethink how Indian inequality statistics are collected and organised.

India’s Gini Index in the World Bank’s dataset has not been updated since 2011. 140 countries have more updated information on income inequalities than India, including 20 countries that update income inequality data annually. India’s neighbours including Pakistan (2018) and conflict-torn Myanmar (2017) have more updated data.

India’s Missing Data

In February 2020, the then Minister of State Finance Anurag Thakur informed Parliament that data on income/wealth is not maintained by the Government. The more recent NITI Aayog’s third ‘SDG India Index and Dashboard 2020–21’ has again omitted metrics of wealth or income inequalities.

India remains one of the countries that has consistently failed to report on the Sustainable Development Goals targets for the rate of growth of the poorest 40% of households.

Inconsistencies In India’s SDG 10 Reporting

The NITI Aayog’s latest SDG report lacked data on income inequality while addressing India’s performance on SDG 10: Reducing Inequality. The number of indicators used to measure this goal has fluctuated – from four in 2018 to nine in 2019 and seven in 2020. While one may only wonder if it was cherry-picking evidence to arrive at the desired scope, what is clear is that the datasets are not comparable across the years.

What Should Be Done?

The process of addressing rising inequality must be rooted in improving mechanisms for its measurement.

There is an immediate requirement of disaggregated data by income considering class has clear implications on developmental outcomes. While India collects information based on social identity, we need to start capturing data on family income in order to understand how government policies relatively capture the experiences of India’s rich and poor. Thus, it would be critical to understanding how children of India’s rich and poor have withstood the digital divide during the current Covid-induced school lockdown.

Only if we understand the difference between these experiences can we plan for an education system that gives equal chances to all of India’s young citizens and which does not handicap the children of India’s poor by locking them behind a digital divide. It would be critical to understanding the differential impact of the Covid vaccination strategy on India’s rich and poor to ensure our rich and poor citizens have an equal chance to receive life-saving vaccines.

While capturing data regularly would be critical, we also need to start a more regular collection of data on income and wealth inequality and ensure that data is made freely available in the public domain. It is time for India to move from a reliance on a single data point in a decade via the Census to collecting at least two surveys over a ten-year period as a start.

If Pakistan and conflict-affected Myanmar can collect two or three data points in a decade respectively, so can India.

This should also be done using a reasonably comparable methodology capturing income and wealth inequalities.

This is critical not only for practical reasons to understand and subsequently shape the relative development trajectories of India’s rich and poor, but also to signal that our government still cherishes the dream of an equal India. On Independence Day, it is time to remember the pledge India made at its birth to treat all its citizens equally.

It is also the right moment to ask for a Covid recovery plan that is rooted in an understanding of the unequal impact of the pandemic. In January, a survey undertaken by the Fight Inequality Alliance in India ahead of the budget found that 78% respondents believed that a 2% Covid-cess should be imposed on individuals earning more than Rs 2 crore per annum and a temporary tax be imposed on companies making extra profits during the pandemic. Instead, the government budget and stimulus package mostly ended up benefitting corporates, ignoring even basic needs like free vaccines, improved healthcare and school education.

Anjela Taneja leads the work on inequality, health, and education at Oxfam India.

The views expressed here are those of the author, and do not necessarily represent the views of BloombergQuint or its editorial team.

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