Article 3: Between growth haves, have-nots, mind the lag
Why in news: Concerns over widening income inequality in India have intensified after data showed a sharp rise in ultra-rich individuals, stagnant wage growth, and limited quality employment opportunities despite sustained economic growth.
Key Details
- Rising income inequality: The number of individuals earning ₹100 crore or more has increased significantly, alongside a growing population of dollar millionaires.
- Stagnant wage growth: Average wages for regular and casual workers remain modest, limiting broad-based growth in household purchasing power.
- Changing consumption pattern: Demand is increasingly driven by affluent consumers, with premium brands expanding faster than mass-market consumption.
- Shrinking upward mobility: AI-related disruptions in IT and weak manufacturing job creation have reduced avenues for stable, high-quality employment.
- Demographic challenge: Growing competition for government jobs and protests over recruitment highlight the urgent need to create productive employment and strengthen education and skilling.
Rising Wealth Concentration
- Sharp increase in ultra-high-income individuals: People reporting annual incomes of ₹100 crore or more increased from 142 (AY 2021–22) to 576 (AY 2025–26).
- Growing millionaire population: India now has around 9.44 lakh dollar millionaires (UBS Global Wealth Report 2026), placing it alongside advanced economies such as Switzerland.
- Uneven prosperity: While a small section has accumulated significant wealth, a large share of the population continues to face financial insecurity.
Weak Wage and Consumption Growth
- Modest earnings for workers: The average annual income of regular employees increased from ₹2.31 lakh (2022)to ₹2.7 lakh (2025), while casual workers earned only ₹453 per day on average.
- Narrow consumption expansion: Slow employment and wage growth have limited the purchasing power of the majority, with consumption growth driven mainly by high-income households.
Changing Consumption Patterns
- Premium markets expanding faster: Rising incomes at the top are reshaping consumer demand towards premium products and services.
- Illustrative trend: Apple India’s revenue is approaching that of Hindustan Unilever Limited (HUL) despite catering to a much smaller customer base, reflecting stronger spending by affluent consumers.
Limited Opportunities for Upward Mobility
- IT sector under pressure: Artificial Intelligence (AI) threatens employment growth in the IT sector, traditionally a major source of middle-class mobility.
- Manufacturing shortfall: Unlike East Asian economies, India's manufacturing sector has not generated sufficient large-scale employment.
- Rise of low-productivity jobs: Employment growth has increasingly occurred in gig economy roles such as delivery riders and security guards, offering limited long-term career progression.
Employment Challenges and the Demographic Imperative
- Growing job insecurity: Rising protests over exam paper leaks, railway recruitment, and intense competition for government jobs highlight widespread concerns about employment opportunities.
- Need for urgent policy action: As India passes through a favourable demographic dividend, expanding quality education, skill development, and productive employment opportunities is essential to harness its young workforce effectively.
Conclusion
India's demographic dividend can become a transformative opportunity only if economic growth generates broad-based employment and rising incomes. Policies must focus on labour-intensive manufacturing, quality education, skill development, social protection, and productivity enhancement. Inclusive growth that expands opportunities across all sections of society is essential to ensure economic progress translates into shared prosperity and long-term social stability.
Descriptive question:
"India's economic growth has been accompanied by rising income inequality and limited employment generation." Examine the implications of this trend on inclusive development and suggest measures to promote equitable growth. (15 marks, 250 words)
Source: The Indian Express