Income inequality in India on decline since FY17: SBI Ecowrap 

Income inequality in India has been on a decline since FY17, as per the State Bank of India’s latest Ecowrap report. SBI Ecowrap stated that India also fared well during coronavirus pandemic in terms of navigating income shocks across population.  

The report read, “With a progressive growth in output across states as proxied by GSDP (gross state domestic product), it is clear that the fruits of such a growth have clearly reverberated and dovetailed into an inclusive growth if estimates from Gini coefficient of state-wise per capita income are any indication that has improved since FY17. India has thus done quite well during pandemic in terms of navigating income shocks across deciles of population.” 

It further stated that average income of states reached from Rs 18,118 in 2001-02 to Rs 68,845 in 2011-12 and Rs 1,74,024 in 2021-22, while adding that inequality has significantly moderated in states. As per this report, coefficient of variation of per capita income of states went down from 76 per cent in 2011-12 to 67 per cent in 2021-22.  

The report explained, “The ratio of per capita income of a state from the average continues to show similar pattern over the years, within Sikkim and Goa leading the pack of states with a ratio of exceeding 3, indicating that the average per capita income of these states was more than three times the average income of all the states put together.” 

It further mentioned states like Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan and Uttar Pradesh which continue to be at the bottom in terms of per capita income. The Ecowrap underscored that nearly half of the total tax transfers were based on equity consideration with efficiency parameters given token recognition.  

SBI also factored in the gap between GDP and GNI or statistical discrepancy, which is typically about 1 per cent. While GDP is the total market value of finished goods and services produced within a country in a set time period, GNI is defined as the total income received by the country from its residents and businesses regardless of their location.  

It further noted, “A gap in GDP and GNI indicate that the country is net receivable or net payable. An average gap between GDP and GNI was around 1.1 per cent during FY12 to FY20. However, this gap increased marginally to 1.3 per cent in FY21 and then 1.6 per cent to FY22.”