India managed shocks well during COVID, income equality on the up since FY17: SBI report

The income inequality in the country has been declining since the FY17, even during the COVID-19 pandemic, the State Bank of India’s latest Ecowrap report stated. The report noted that the independent estimates including PFPS (Periodic Labour Force Survey) household monthly consumption data shows that all India poverty ratio has dropped to 17.9% from 21.9% in 2011-12, and poverty in urban areas is lower than rural areas.

According to the report, study revealed that income inequality declined even during the COVID-19 pandemic. "With a progressive growth in output across states as proxied by GSDP, 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 said.

'Average income reached to Rs 1,74,024 in 2021-22 from Rs 18,118 in 2001-02'

The research wing of India's largest lender said that average income has increased gradually to reach Rs 18,118 in 2001-02 and to Rs 68,845 in 2011-12 and Rs 1,74,024 in 2021-22. "Though the overall growth has been reasonably strong, interState inequality has significantly moderated, albeit persisting at high level. The coefficient of variation of per capita income of states moderated to 67% in 2021-22 from 76% in 2011-12," it said

"The ratio of per capita income of a State from the average continues to show a similar pattern over the years, with Sikkim and Goa leading the pack of States with a ratio 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 added.

The report, as per studies, cited that there is a remarkable consistency in the ranking of states in terms of per capita income, at all three levels i.e. top, middle and bottom. Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Uttar Pradesh and Rajasthan continue to be at the bottom.

"However, it must be emphasised that this issue has been recognised by various Finance Commissions overtime with transfers based on both equity and efficiency. Nearly half of the total tax transfers have been based on equity consideration with the efficiency parameters being given only a token recognition. Centre transfers have been in favour of geographically smaller States and economically weaker States," the report said.