Title: Income Distribution and Inequality in India: 2014-19
Authors: Nishanth Kumar, Anand Sahasranaman
Discussant: Bharti Nandwani
We conducted the sixth Consumer Pyramids Research Seminar on 18 January 2021 at 6.00 PM IST.
The researchers presented findings from their paper examining the trends in inequality and poverty in India. Their work extends the existing literature by focusing on the dynamics of poverty and inequality at the very bottom of the income distribution in India.
Using the CPHS dataset, the authors created a distribution of income estimates at the national level between 2014-19. They employed the K-index (Kolkata index) inequality measure, which indicated that the top 35 percent of the population was earning 65 percent of all income share.
The authors found that while the average incomes of the top 95 percent of the income distribution increased between 2014-19, the real incomes of the bottom 5 percent experienced a decline of nearly 5 percent per annum. This was especially true of rural India, where both the share of income as well as the real income earned by the bottom of the distribution were found to be declining.
Working in collaboration with the London Mathematical Institute, the authors used the Geometric Brownian Motion with Reallocation (RGBM) model to study the dynamics of income growth and reallocation in the Indian income distribution. They found that after the 2000s, reallocation was negative, that is, going from lower to higher incomes. This pointed to the possibility that the bottom of India’s income distribution may have been seeing negative income growth over the past 20 years.
Bharti Nandwani, serving as the discussant, suggested that the authors emphasize the contribution their paper makes to the existing literature. She recommended that they address the limitation of a shorter data time-period, and perform robust checks for their inequality measures. She offered inputs on using the CPHS dataset, and possible avenues for the authors to provide greater explanations.
Following a round of clarifications and responses by the authors, Kaushik Krishnan concluded the webinar.