Third, income inequality is certain to be higher than expenditure inequality, though since NSS doesn’t collect data on incomes there are several problems in computing income inequality. We have been able to do this only for those who aren’t self-employed — ie, those who earn wages/salaries. For both rural and urban India, this shows highest increase in average incomes for relatively poor (bottom 20 per cent), followed by relatively rich (top 20 per cent). It is the middle that has been relatively squeezed. India’s income inequality is now at its highest level since Independence. One may argue this isn’t a reason for concern because absolute incomes have also increased in the middle. However, there’s reason for concern because of another finding: lack of education/skills is the single most important source of income differentials.

The impact of reforms in creating greater opportunities is not the issue. The issue is ability of available human resources to benefit from such opportunities and unequal access to both education and health are constraints there and thus raises questions about what the present government is attempting to do. Motherhood statements apart, for all practical purposes, UPA government’s initiatives err on the side of entitlement, rather than empowerment. There is an attempt to cast everything into an employer-employee mould, be it through NREGA, reservations or social security legislation. In contrast, the empowerment agenda requires physical and social infrastructure. If that happens, we needn’t worry about

either poverty or inequality.

The writer is a noted economist