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The gap between the rich and the poor in India is not that wide

June 5, 2007
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According to a survey by the World Institute of Development Economics Rsearch (WIDER) there isn’t that great an economic difference between poor Indians and rich Indians. Well, at least not by global standards. The top 10 per cent of the richest Indians are 7.3 times richer than the poorest 10 per cent, but other nations fare worse.

The rich in countries like Brazil are 57.8 times richer than the poor, and the ratio for the United Kingdom is 13.8 times, the United States almost 15.9 times, China 18.4 times and Russia 12.7 times. More horrifying – the top ten per cent of Bolivia‘s population is 168 times richer than its poorest 10 percent! The ratio for Namibia is 129 times and Lesotho 129 times.

Enough reason for Indians to gloat?

Not really. We may have a better distribution of income here, but the per capita income in India is so low that the bottom 10 percent are near starving and without access to education (or hope) which is the only way they can better their life. Therefore comparing ourselves to the developed world or even second world countries like Brazil is of no use.

A look at the $PPP (Purchasing Power Parity) of different countries (for a more detailed explanation of $PPP and the $PPP of all the countries of the world go here.

India, according to data from the CIA World FactBook has a PPP of $3700, while countries like the US are way ahead with $43,500 and the UK at 31,400. Brazil is also higher than us at $8,600. So even if the top ten percent of people in the US are obscenely rich, the poor there aren’t as poor as the poor in India. Well, we knew it I guess, by seeing the Oprah Winfrey Show! In one of her shows she showed us ‘poor’ America. Looking at the plump well-fed faces, one wondered whether those people knew what real poverty was. Being poor by American standards didn’t mean insufficient food. It didn’t mean starvation. It meant not having a car and depending on social security. Perhaps being homeless, and falling back on government shelters.

A comparision with China seems more valid. China’s $PPP is just above India’s at $7600 (not including Hong Kong) which goes to show that the wealth that you see in Chinese cities is not being evenly distributed. Rural China must be very poor indeed, as poor as India…maybe poorer. China’s dazzling cities and expensive malls (they sold the same international brands available in India at a 15-20 per cent higher price) are a clear indication that urban Chinese have more money than the urban Indians. But the disparity between the rich and the poor is almost three times greater than in India! China is growing at over 10 per cent, but presently at least they don’t seem to be taking the poor along. Maybe its temporary…because their growth has been far too fast, faster than India’s, and people haven’t caught up. Their one-child policy however could see them through. (Wiki: $PPP is calculated by the value of all final goods and services produced within a nation in a given year and dividing it by the average population of the same year).

In India we are burdened with a large and growing population. As a democratic nation we cannot adopt the harsh one-child policy of the Chinese government. Millions of our countrymen and women yet to be born are doomed to poverty. On the other hand, China plans to double its GDP and halve its population! Whew.

However, articles which suggest that India is leaving the poor out of the economic boom are true only to a limited extent. Our poverty line has decreased and a sizeable chunk of our poor have moved up the economic scale to become middle-class (300 million today). So even while poverty in our country needs to be alleviated, the fact is that we aren’t as badly off as many other countries. At least not when compared to a rapidly growing economy like China’s.

However, there are economists who suggest that the gap between the rich and the poor in India is widening…but Japan‘s example shows that it is possible to have a developed economy and keep the gap between the rich and the poor at a reasonable level.

The top 20 percent of the richest Japanese are only about 4.5 times richer than the bottom 10 per cent. And the $PPP in Japan is 33,100. A very high average income, but the distribution of income is more evenly spread out than in the US or the UK.

I am not an economist, but I cannot help but wish that we can go the Japanese way. Make our poor so rich that they have at least a quarter of the money that the rich have. Sounds like Utopia, but we can do it if we can overhaul our education system and control our population. Not tomorrow perhaps, but its a goal to aim for.

Related Reading: Lets make the poor richer instead of making the rich poorer
India to be fifth largest consumer market by 2025
Quality of education in India differs widely
India will eradicate poverty, although slowly
India to be number two economy world-wide by 2050

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12 Comments leave one →
  1. June 10, 2007 9:40 am

    ya its true the wide gap exists between the rich and the poor in india. i do accept that india has the some of the richest people in the world. but we should not forget india is a country with highest poverty rate. indians can be put in both the categories. corporate indians are no way lesser than the many europeans. if you compare the indians in cities like Bangalore, mumbai, hyderabad, delhi they are much of metrosexual than the westerners and lead a modern life. but on the other side our indians are poorer than the africans. even today there are people in india who strive for a piece of bread. we can see many people in india who go across the dustbins where the food is thrown, we can see people begging for food.
    its so pathetic.

    Ramesh, this is a bit late for replying to your comment, but I guess its better late than never. Thanks for coming here and responding. I agree, its horrible to see people pick food out of dustbins, but its routine here.

    • Abhishek permalink
      September 22, 2010 7:23 pm

      Ya very true..there’s a wide gap bet’n rich people and a poor one in India..the imbalance leads to an extreme poverty in some areas..Its also because of the illiteracy that either tends to criminal activities or poverty..So education is a vital drug,that can eradicate all social evils..i feel very sad for the poor people begging for food, and when dey pick d food from d garbage or from d road I feel Ashamed..

  2. prashob permalink
    October 6, 2007 1:50 pm

    The article was throwing light on the fact the gap between the rich and poor in India. It is explanining that the poor people in India is nearly starving, being one of the world’s largest food producers it is really pitty. Why this is happening? Begging and leading a life of a begger is just coming out because of laziness, hating to do work, infact some find this as a good source of income too. In these cases even the country’s governance cannot do any thing. Any person can lead a life like this and say that he is forced to do so because he is poor. All poor people are not beggers, we have to differentiate. There are number of poor people around the country who are getting propsperous and leading a good life due to their hard work and of course getting the benefit of the booming economy. Government cannot be blamed for these cases.In a heavily populated country like ours an individual has to decide himself to do work, to find a suitable job for his skills on his own.

  3. October 6, 2007 3:08 pm

    Prashob, true quite a few beggars make it a business.
    But there is no denying the poverty in the country. And unfortunately though jobs are available, the people do not have requisite skills. Take a simple thing like being a housemaid. Many beggars lack the social skills necessary to be one. They will also not know the basics of hygiene. Its all a lack of basic education.
    It is surely the fault of the government, for mismanaging the education system. We can but hope that things will improve.

  4. shashikant permalink
    August 28, 2008 1:33 am

    comparing top 10 percent with bottom 10 is not a good idea,
    compare top 1 and bottom 1 percent and you will see a wide gap.

    The best idea will be to compare in numbers and not in percentage. If you plot a graph that way, you will get a very good idea of how wide is this gap.

    The extra rich people in India are very few, say a few thousand in 1 billion. That will amount to something like .0001%.

    At best you can think it is .001% ok, .01%…. this small percentage of people from .001 to .0001 percent has almost all the wealth of India but not assets.

    So here are conclusions:
    1. The rich in India are very rich and poor very poor
    2. Most people are poor so have little gap:-)
    3. Some are in middle class have some gap
    4. Gap between life-style of lower middle class and middle class is reducing because of cheap technology, second hand equipments etc and that is what a middle class person will see.
    5. Most of use have seen poors but do not have the real idea of the extent of poverty.

    Solution: help government to take bold decisions in promoting infrastructure (this allows people to find new ways to help themselves), create jobs somehow and educate people to become productive with least bit of efforts…

    Saying things is very easy but moving even an inch takes some effort. That I know very well. Hope someday we will become less hungry of status/money and will feel saint like to work commitedly for good causes. Till then I am going for sleep.

  5. Saran kumar permalink
    September 11, 2009 4:39 pm

    The gap between RICH and poor can be reduced through means of Education only…. The Goverment should come forward to establish free Quality Education system to the people based on the Income wat dey r receiving.
    1) To apply this the Goverment should provide Identity Number to all citizens of Mother India ie irrespective of people working under Gov r Private containing all details about individuals even he/she is a beggar.
    2) Do regular check on each Indentity Number and update the current Status right from Birth to Death.
    3) Do the necessary action to improve the Educational and Finacial status of every individual.
    4)Government should Make all polticians aware wat is happenning in and outside india …….
    WE the people of india should FULLFIL the dream of Great Adbul Kalam…
    God Bless Mother India

  6. saravana permalink
    October 12, 2009 6:11 pm

    The Gap between rich and poor in india can be reduced in many ways.
    1) Change the education system in india, reduce the cost of education.
    2) Don’t compare the rich and poor in india, compare the lowest and hightest tycoon in indian’s why such a difference. Atleast compare the lowest and highest salary in last 5 year, the lowest is same from last 5 years, and highest ?
    3) Instead of blaming indian government, let all the education institute make sure that they are given a quality education. Education is the first step for improvement.
    4) Black money is also one of the factor.

    Government should take responsible for this because most of the black money are made by the politicians.

    Rich people take some step in help poor, means poor people who are really working hard and to the beggars.

    Jai Hind

  7. dj booms permalink
    July 27, 2010 7:09 pm

    According to me ” It is too difficult to say that difference between poor and rich in India is not so much..because a rich man in India have too much things like luxury cars, bikes, jewelery,different kind of things in his house for his family but poor don’t have enough things like food,cloths and other domestic things and specially i have to say there are too many poor Indians who don’t have enough money to spend for their education and for their primary expenses so difference is very bad in india”

  8. spongebob permalink
    September 9, 2010 9:12 pm

    @nita
    I really liked the way you presented the stuff in a statistically manner, gives a better insight. With the government programs like free lunch in school, free education and travel to school for females untill 10th grade have a significant good impact in the upbringing kids. I think the biggest problem of our country is the enormosly growing population. India has world 2.4% land and population of more than 15% of the world, no matter how much is the productivity, with this population growth there is no way we can feed people and hence all the cyclic problems like lack of funds for education, health, land which can never is solved.
    When I compare living in western countries why there is less population growth, the main reason i feel that in India’s lack of Social Security and Old age support perpetuates kids. Some one should be there to take care of you at old age so keep producing kids, but here in western countries, i really like the concept of community work involving helping the olderly community to get around the town, clean and fix their homes, basically younger generation does favor on olderly and viceversa.
    Comments are welcome or email patil7603(at)gmail.com

  9. Feng permalink
    September 16, 2010 8:30 pm

    China indeed doesn’t do a very good job to take care of the people living in rural areas. Many farmers struggle for a meal and a chance to send their children to school,while the officials spend much money wasting. What a world!

  10. Nazeer permalink
    April 17, 2012 1:26 am

    The gap between the rich and poor is directly proportional to the elevated morals and inversely proportional to selfishness among people.
    What is that factor which elevates a man to be at the peak of Morals? That is the fear of God that he is accountable and answerable of what he possesed. In contrast to this, a selfish person; why shouldn’t he yearn to be the richest person of the world as he don’t fear God thinking he is not going to be held accountable.
    Any approach to a system which may bridge the gap between the Have & Have nots can only be made by a person or society who/which is God fearing and not the vice versa.
    A healthy society may entertain and not only consider the Rights of rich over poors and poors over rich but also they practice it and emerge as an Ideal example to the world to be followed. In my view the population can never be a hinderance towards the progress of any country rather I treat it as a boon towards the development of a country.
    The births and deaths are no way under the control of human beings but it is totally in the hands of our Creator. He made us rich and poor and subjected us to test that which of us fulfill our duties towards Him so we’ll be sent to Heaven or Hell accordingly.

  11. hussen permalink
    April 26, 2012 5:15 am

    can anyone provide some information on how those different rich and poor are living together in india and how is the intercultural communication between them with some trusted sources

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