Gap Between the Rich and Poor in India
Income Inequality
Absolute Poverty and Income inequality are two different concepts. Absolute poverty is when people have limited access to the basic necessities of life for a required level of physical and mental development whereas income inequality often referred to as relative poverty is where people below a certain level of income in that country are considered to be poor. There are means to eradicate poverty from a country but income inequality has prevailed and is too difficult to be uprooted. “Income inequalities are pervasive and growing in virtually all countries” (World Bank, 2008). Globalization has been named as one of the most important factors causing this disparity within and among nations.
“It is reported that the top 1 percent of income recipients receive about 15 percent of worldwide income, and the top 5 percent receive 40 percent of all income. Meanwhile, the poorest 20 percent receive only 1 percent of the global income” (Banya, 95). This paper explains the issue and cause of poverty in the era of globalization, the relationship between growth, globalization and poverty, the differences of approach towards poverty in the international system and the widening gap in developed and developing countries. India represents an excellent example to evaluate the income inequality.
Income Inequality in India
“Till the nineties the process of globalization of the Indian economy was constrained by the barriers to trade and investment liberalization of trade, investment and financial flows initiated in the nineties has progressively lowered the barriers to competition and hastened the pace of globalization” (Balakrishnan, 2004). From the Nehru regime to the late 1980s, the Indian economy was comparable to that of a social economy. It faced strict governmental regulation and protectionism. The growth rate was slow and agriculture was the main occupation of the population. Today, the circumstances have changed, and India is now portrayed as a democratic developing country that actively participates in global integration. However, if closely observed, India still faces the astronomical problem of absolute poverty and income inequality. This paper examines the agents behind the widening gap between the rich and the poor by taking into consideration the colonial rule, economic policies and current indicators of income inequality in India.
British Colonial Rule
The British took over India by their slow encroachment through the East India Company and then took over the entire country in no time through their divide and rule policy. On one hand where it provided India with valuable infrastructures and institutions like the court system, railroads and the English language; the British rule took away from India the tremendous amount of wealth and resources that the country possessed making