Income inequality declined in India during Covid-19: SBI Report

NEW DELHI: While income inequality in India has been declining since FY17, inequality declined during the pandemic, a research report from the State Bank of India (SBI) said on Monday.

The report authored by Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said, all India poverty ratio declined to 17.9% in 2020-21 from 21.9% in 2011-12, with poverty in urban areas lower than in rural areas.

‘’In fact, the NBER study concludes that there was a decline in income of the rich attributable to the high sensitivity of business income to aggregate fluctuations. Additionally, the study concluded that labour demand for the occupations the rich occupy may have significantly declined than demand for the services provided by the poor. Thus, in hindsight, the pandemic may have been a leveller in terms of inequality with the poor getting protected through measures such as food transfers,’’ it said.

The report said using output and income data for 33 states for the decade ending FY21 shows that while the output growth as measured by Gross State Domestic Product had steadily increased over the decade, with a minor blip in FY21, the estimated Gini coefficient, a measure of income inequality (in both aggregate and per capita terms) has been declining even before pre pandemic and has moved in a very narrow range.