The definition of the concept of poverty varies from country to country. And a poverty line relative to the national average gives an idea about the state of inequality. A big leap in the income of the richest pushes up the poverty line, as a result of the hike in the national average income. That means the poor appear even poorer though their income level goes up. In India, anybody whose income is below Rs. 27.2 a day in rural areas and Rs. 33.3 in cities is considered poor. But official statistics are not an index to the measure of inequality. The latest report of the National Sample Survey Organization (NSSO) on people’s spending pattern reveals the wide gap between rural and urban people. The monthly per capita consumption expenditure of the top 5% of the rural population is nine times that of the bottom 5%. The average consumption by the top 5% of the population is about 14.7 times that of the bottom 5%.
Wealth is increasing in India. The number of rich and middle class people is on the rise. Wealth per adult in India rose from Rs. 2,000 in 2000 to Rs. 4,700 in 2013. But 94% of adults have wealth below Rs. 10,000. On the other hand, just 0.4% of the population has a net worth of over Rs. 100,000. The IMF Managing Director, Christina Lagarde has warned against the alarming global rise in income inequality. India is one of the worst sufferers. The wealth of billionaires in the country has shot up twelve fold in 15 years. That itself can wipe out the absolute poverty here. Inequality comprises a lot more that absolute poverty. Reducing it should be the top priority in achieving higher GDP growth.
