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Economic mobility in India: Estimation using ‘noisy'data
, H Li, D L Millimet
Published in
Abstract

There has been a dramatic rise in inequality in India post-liberalisation. This article finds economic mobility to be markedly low, with at least seven out of 10 poor households remaining poor or at-risk of being poor during 2005-2012. It also finds that Muslims, lower-caste groups, and rural households are in a more disadvantageous position in terms of escaping poverty or transitioning into poverty compared to Hindus, upper-caste groups, and urban households.

There has been a phenomenal rise in economic inequality in India, especially in the post-1991 liberalisation period. The 2018 Oxfam study reports an increase in the consumption Gini index in both rural and urban areas from 1993-94 to 2011-12. According to the study, the wealth of Indian billionaires on the Forbes list grew by almost 10 times over a decade and they now account for 15% of India’s gross domestic product (GDP). According to Global Wealth Report (GWR), 2017, between 2002 and 2012, the share of the bottom 50% of the population in the total wealth declined from 8.1% to only 4.2%. In contrast, over the same time period, the share of the top 1% in the total wealth increased from 15.7% to 25.7%. Among the countries for which GWR gives the share of wealth held by the top 1%, only Indonesia and the US have higher shares of wealth than India.

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