| PYQ Relevance:
[UPSC 2023] Why did human development fail to keep pace with economic development in India?
Linkage: The report says that India’s low scores in areas like women’s jobs and health show a deep problem that is slowing down the country’s progress. Even though the economy is growing, women are still left behind in key areas. That’s why the report’s low ranking is a strong warning. |
Mentor’s Comment: The World Economic Forum’s Global Gender Gap Report 2025 has brought renewed attention to India’s poor performance in gender equality, ranking it 131 out of 148 countries. Despite being a global economic and digital power, the report highlights serious structural deficits in India, especially in women’s health, economic participation, and decision-making roles.
Today’s editorial analyses the World Economic Forum’s Global Gender Gap Report 2025 for India. This topic is important for GS Paper II (Social Justice) in the UPSC mains exam.
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Let’s learn!
Why in the News?
Recently, India was ranked very low in the World Economic Forum’s Global Gender Gap Report 2025, showing that there are serious and long-standing inequalities between men and women, especially in jobs and economic roles.
Why is India’s low gender gap ranking seen as a structural failure?
- Low Global Ranking in Gender Gap: According to the Global Gender Gap Report 2025, India ranks 131 out of 148 countries, reflecting persistent inequality in key areas such as economic participation and health. This ranking indicates a structural issue beyond isolated policy failures.
- Poor Female Labour Force Participation: India ranks 143rd in economic participation and opportunity, with women earning less than one-third of what men do. Female labour force participation remains below 25%, revealing systemic barriers to employment despite rising educational levels.
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What health barriers limit women’s economic participation in India?
- High Anaemia Prevalence: Nearly 57% of women aged 15–49 suffer from anaemia (NFHS-5), which weakens physical capacity, affects cognitive ability, and reduces safe maternal outcomes, ultimately restricting their ability to work or study.
- Gendered Gaps in Healthcare Access: Women, especially in rural and low-income groups, face inadequate access to reproductive health, preventive care, and nutrition, leading to poor health outcomes and lower life expectancy than men.
- Neglect of Women’s Health in Policy: Public health systems often fail to prioritise women’s specific needs, with underfunded primary care, weak maternal services, and poor sanitation, resulting in chronic health issues that hinder long-term workforce participation.
How does unpaid care work hinder gender equality and growth?
- Limits Women’s Workforce Participation: Indian women perform nearly seven times more unpaid domestic work than men (Time Use Survey), leaving little time for formal employment or skill development.
For instance, many women drop out of jobs after childbirth due to lack of childcare support.
- Undervalued in National Economy: Despite its economic value, unpaid care work is invisible in GDP calculations and often excluded from policy priorities. Countries like Uruguay have tried to measure and integrate care work into development plans to promote inclusive growth.
- Worsens Gender Inequality in Decision-Making: The burden of care responsibilities keeps women out of leadership roles and policy spaces, reinforcing their marginalisation in public and private institutions. Low representation of women in budget committees leads to underfunding of women-centric welfare schemes.
| Note: The Time Use Survey, conducted by the National Statistical Office (NSO) in India (latest available: 2019), provides valuable data on how individuals allocate time to various activities over a 24-hour period. |
Which global models can India adopt for care economy reforms?
- Uruguay’s Approach: The National Integrated Care System ensures universal access to services like childcare, eldercare, and disability assistance, aiming to reduce the unpaid care burden and promote professionalisation of care work.
- South Korea’s Model: Through expansive public investment in care services, including care vouchers and subsidised facilities, South Korea has enhanced female workforce participation and addressed the care gap in ageing and young populations.
- Nordic Countries’ Example: Nations like Sweden and Norway offer state-supported childcare, generous parental leave, and policies that promote shared caregiving roles, fostering strong welfare systems and improving gender equity.
What are the demographic risks of excluding women from the workforce?
- Rising Dependency Ratio: When women are excluded, fewer people contribute economically while more depend on them, especially as India’s population ages. Eg: By 2050, nearly 20% of Indians will be senior citizens, increasing the burden on a shrinking working population.
- Shrinking Labour Force: Low female participation limits the potential of India’s large youth base, reducing the nation’s demographic dividend. Eg: India’s female labour force participation was just 24% in 2023, compared to over 60% in many developing nations.
- Stagnant Economic Growth: Without women’s inclusion, GDP growth slows, and the country may miss massive income gains. Eg: McKinsey Global Institute estimated India could add $770 billion to its GDP by 2025 by closing gender gaps.
What are the demographic risks of excluding women from the workforce?
- Beti Bachao Beti Padhao (BBBP): Launched in 2015, this scheme aims to improve the child sex ratio, ensure education for girls, and raise awareness against gender discrimination.
- Pradhan Mantri Matru Vandana Yojana (PMMVY): This maternity benefit scheme provides financial support to pregnant and lactating women for their first childbirth, promoting nutrition and health.
- Mahila Shakti Kendra (MSK): MSKs offer support services at the grassroots level, including skill training, employment guidance, legal aid, and digital literacy to empower rural women.
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Way forward:
- Invest in Women-Centric Infrastructure: Enhance public spending on healthcare, childcare, and eldercare services, especially at the primary level, to support women’s well-being and free up time for economic participation.
- Institutionalize Gender-Responsive Policies: Implement gender budgeting, time-use surveys, and inclusive labour reforms to recognize unpaid care work and promote women’s entry into the formal workforce.
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Why in the News?
The ‘Maratha Military Landscapes’ of India have been inscribed on the UNESCO World Heritage List under the cultural category during the 47th session of the World Heritage Committee held in Paris.
About Maratha Military Landscapes:
- Overview: A network of 12 forts showcasing the Maratha Empire’s military architecture and strategic fortification from the 17th to 19th centuries.
- Time Period: Developed between 1670 CE (Shivaji’s era) and 1818 CE (end of Peshwa rule).
- Geographical Spread: 11 forts in Maharashtra and 1 in Tamil Nadu (Gingee Fort), covering hill, coastal, forest, plateau, and island terrains.
- Key Forts: Salher, Shivneri, Lohgad, Raigad, Rajgad, Pratapgad, Khanderi, Suvarnadurg, Panhala, Vijaydurg, Sindhudurg (Maharashtra); Gingee (Tamil Nadu).
- Types:
- Hill forts: Rajgad, Raigad
- Hill-forest: Shivneri
- Coastal: Suvarnadurg, Vijaydurg
- Island: Khanderi, Sindhudurg
- Protection:
- 8 forts by Archaeological Survey of India (ASI)
- 4 forts by Maharashtra’s Directorate of Archaeology & Museums
- Ideology: Reflects Shivaji’s military decentralization, terrain-based defense, and self-sustaining fort systems.
- Tagged under cultural criteria:
- (iii) Exceptional testimony to a cultural tradition
- (iv) Outstanding example of military architecture
- (vi) Association with historic events and traditions
What are UNESCO World Heritage Sites?
- A WHS is a landmark or area recognized for its cultural, historical, natural, or scientific value to humanity.
- It is governed by the UNESCO World Heritage Convention (1972).
- India formally signed the Convention on November 14, 1977.
- Sites are selected by the World Heritage Committee, comprising 21 elected state parties.
- Categories include:
- Cultural (e.g., forts, temples, cities)
- Natural (e.g., forests, parks, biodiversity sites)
- Mixed (having both cultural and natural value)
- Selection is based on 10 criteria (6 cultural + 4 natural); at least one must be met.
- Once inscribed, sites are eligible for global recognition, protection, and funding.
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| [UPSC 2024] Consider the following properties included in the World Heritage List released by UNESCO:
1. Shantiniketan 2. Rani-ki-Vav 3. Sacred Ensembles of the Hoysalas 4. Mahabodhi Temple Complex at Bodhgaya
How many of the above properties were included in 2023?
Options: (a) Only one (b) Only two* (c) Only three (d) All four |
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Why in the News?
The Department of Telecommunications (DoT) has launched an expanded Sanchar Mitra Scheme to engage engineering students as digital ambassadors for promoting telecom literacy, digital safety, and citizen engagement.
What is the Sanchar Mitra Scheme?
- Launching Body: An initiative by the Department of Telecommunications (DoT), Government of India.
- Primary Aim: To engage student volunteers as “Sanchar Mitras” or digital ambassadors to spread awareness about telecom-related issues.
- Purpose:
- Bridge the communication gap between citizens and the telecom ecosystem.
- Promote safe and informed use of telecom services.
- Encourage public participation in India’s digital transformation.
- Implementation Status:
- Piloted in select institutions.
- Now being scaled up for nationwide rollout.
Key Features and Highlights:
- Target Audience: It primarily targets students from engineering and technical backgrounds such as telecommunications, computer science, electronics, and cybersecurity.
- Selection of Volunteers: Students will be nominated as Sanchar Mitras in consultation with DoT field units and educational institutions.
- Training Modules: Volunteers will be trained to conduct grassroots campaigns on cyber fraud prevention, EMF radiation concerns, and responsible digital behavior.
- Training Institutions: Training will be delivered by the National Communications Academy–Technology (NCA-T) and the Media Wing of the DoT.
- Core Pillars: The scheme is structured around three key pillars: Connect, Educate, and Innovate.
- Tech Awareness Promotion: Sanchar Mitras will promote awareness on emerging telecom technologies like 5G, 6G, AI, and cybersecurity.
- Community Outreach: Students will engage with communities, NGOs, and schools to foster a culture of informed digital citizenship.
- Strategic Alignment: It aligns with India’s strength in the “Four Ds”: Democracy, Demography, Digitisation, and Delivery.
| [UPSC 2010] Which among the following do/does not belong/belongs to the GSM family of wireless technologies?
Options: (a) EDGE (b) LTE (c) DSL* (d) Both EDGE and LTE |
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Why in the News?
The Ministry of Heavy Industries (MHI) has launched E-Truck Incentive Scheme to provide financial incentives for electric trucks (e-trucks) under the PM E-DRIVE initiative.
What is E-Truck Incentive Scheme?
- Overview: It is a dedicated scheme to provide financial incentives for electric trucks under the broader PM E-DRIVE initiative.
- First-of-its-Kind Support: This is the first direct government support specifically for electric trucks to promote clean, efficient, and sustainable freight mobility.
- Target Vehicle Categories: It targets N2 and N3 category trucks, as per Central Motor Vehicle Rules (CMVR):
- N2: GVW above 3.5 tonnes up to 12 tonnes
- N3: GVW above 12 tonnes up to 55 tonnes
- Incentive for Articulated Vehicles: For articulated vehicles, the incentive applies only to the puller tractor of the N3 category, not the trailer.
- Warranty Requirements:
- Battery: 5 years or 5 lakh km, whichever comes first
- Motor & Vehicle: 5 years or 2.5 lakh km
- Incentive Details:
- Based on Gross Vehicle Weight (GVW)
- Maximum support capped at ₹9.6 lakh per e-truck
- Incentives are given as upfront discounts, reimbursed to Original Equipment Manufacturers (OEMs) through the PM E-DRIVE portal
- Deployment Goal: It aims to support the deployment of 5,600 electric trucks across India.
- 1,100 trucks reserved for Delhi, with ₹100 crore allocated due to high pollution levels
- Mandatory Scrappage Clause: To qualify, applicants must scrap an old diesel truck via scrappage centres approved by the Ministry of Road Transport and Highways (MoRTH).
- Sectoral Impact: It is expected to benefit sectors like steel, ports, cement, and logistics by reducing fuel costs and improving air quality.
About PM E-DRIVE Scheme:
- Overview: It stands for Prime Minister’s Electric Drive Revolution in Innovative Vehicle Enhancement, launched by the Ministry of Heavy Industries in September 2024.
- Long-Term Goal: To to foster an EV ecosystem, reduce carbon emissions, and help India achieve Net Zero emissions by 2070.
- Budget Allocation: It has a total outlay of ₹10,900 crore for two years, aimed at accelerating India’s electric mobility transition.
- Scope and Coverage: It supports multiple vehicle categories: Two-wheelers; Three-wheelers; Electric trucks; Electric buses and Electric ambulances.
- Demand Incentive: It provides direct demand incentives to buyers through OEMs, lowering the upfront cost of EVs.
- Category-wise Allocation:
- ₹3,679 crore: For two-wheelers, three-wheelers, ambulances, and trucks
- ₹500 crore: Specifically for electric ambulance procurement
- ₹4,391 crore: To procure 14,028 electric buses in 9 major cities (Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Surat, Bangalore, Pune, Hyderabad)
- Charging Infrastructure: ₹2,000 crore allocated to build 72,300 public charging stations nationwide, including:
- Fast chargers for four-wheelers, buses, two-wheelers, and three-wheelers
- Digital E-Voucher System:
- Incentives claimed through Aadhaar-authenticated e-vouchers
- Signed digitally by both buyer and dealer for transparency
- Vehicle Scrappage Mandate: Scrapping of old vehicles is mandatory to claim certain incentives, especially for electric trucks, promoting fleet modernization.
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| [UPSC 2025] Consider the following types of vehicles:
I. Full battery electric vehicles II. Hydrogen fuel cell vehicles III. Fuel cell electric hybrid vehicles
How many of the above are considered as alternative (powertrain) vehicles?
Options: (a) Only one (b) Only two (c) All the three* (d) None |
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Why in the News?
Mizoram Governor has imposed Governor’s Rule in the Chakma Autonomous District Council (CADC) due to prolonged political instability and repeated leadership changes.
About Autonomous District Councils (ADCs):
- Basis: They are local self-governing institutions established under the Sixth Schedule of the Indian Constitution.
- Coverage: ADCs are constituted in tribal areas of the northeastern states—Assam, Meghalaya, Tripura, and Mizoram (ATM2).
- Purpose: These councils aim to provide autonomy to tribal communities to preserve their culture, customs, and govern their local affairs.
- Notification: Each tribal area notified under the Sixth Schedule is declared an autonomous district, governed by its respective ADC.
- Objective: The primary objectives of ADCs are to promote tribal self-governance, ensure local development, and protect tribal identity and rights.
Key Features of ADCs
- Legal Status: ADCs are formed through constitutional provisions under the Sixth Schedule and are not governed by state laws.
- Council Composition: Each ADC comprises up to 30 members, of which 26 are elected by adult suffrage and 4 are nominated by the Governor.
- Tenure: The tenure of an ADC is 5 years from the date of its constitution.
- Scope of Authority: ADCs have legislative, executive, and limited judicial powers specific to the needs of tribal communities.
- Applicability of Laws: State and Central laws do not automatically apply in ADC areas unless explicitly extended by the Governor.
Powers and Functions of ADCs:
- Law-Making Powers: ADCs can enact laws on land management, agriculture, and forest use (excluding reserved forests).
- Customary Regulations: They can regulate inheritance, marriage, divorce, and social customs, and appoint traditional chiefs and headmen.
- Local Administration: It oversee services such as primary education, dispensaries, roads, markets, and fisheries.
- Judicial Functions: Councils can establish village courts to try civil and criminal cases involving tribal members, with sentencing powers up to five years.
- Regulation of Trade: They may regulate money lending and trade by non-tribals, subject to Governor’s approval.
- Revenue Sources: It can levy taxes on professions, trades, animals, vehicles, markets, ferries, and public infrastructure like roads and schools.
Autonomy and Limitations:
- Degree of Autonomy: ADCs enjoy substantial legislative and administrative autonomy within their territorial jurisdiction.
- Non-Applicability of General Laws: Parliamentary and State laws apply only when directed by the Governor, ensuring self-rule.
- Governor’s Oversight: Despite autonomy, the Governor retains discretionary powers and can approve, modify, or annul council decisions.
- Financial Constraints: ADCs often face limited revenue generation, which restricts their developmental effectiveness.
- Administrative Challenges: Operational issues include leadership instability, shortage of trained personnel, and state-level interference in council functions.
| [UPSC 2015] The provisions in Fifth Schedule and Sixth Schedule in the Constitution of India are made in order to:
Options: (a) protect the interests of Scheduled Tribes * (b) determine the boundaries between States (c) determine the powers, authority and responsibilities of Panchayats (d) protect the interests of all border States |
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Why in the News?
The International Criminal Court (ICC) has issued arrest warrants for senior Taliban leaders in Afghanistan over the persecution of women, a crime against humanity.
About the International Criminal Court (ICC):
- Established: 2002 under the Rome Statute (1998); headquartered at The Hague, Netherlands.
- Nature: First permanent international court to try individuals for grave crimes.
- Jurisdiction over 4 core crimes:
- Genocide
- Crimes against humanity
- War crimes
- Crime of aggression
- Members: 124 States Parties
- NON-members: India, China, USA, Russia, Israel, Ukraine
- Structure:
- Office of the Prosecutor – investigates and prosecutes cases.
- 18 Judges – elected for 9 years.
- Assembly of States Parties – governs ICC administration.
- Trust Fund for Victims, Detention Centre
- Languages: English, French, Arabic, Chinese, Russian, Spanish
- Funding: Annual budget (2025) ~ €195 million (mostly from member states)
Reach of an ICC Warrant:
- Applicability:
- Crimes by nationals of member states
- Crimes committed on member state territory
- UNSC referrals can extend jurisdiction to non-member states (e.g., Libya, Darfur)
- Obligations on States:
- Member states must execute arrest warrants and cooperate fully.
- Non-compliance can be reported to Assembly of States Parties or UN Security Council (for UNSC referrals)
- Challenges:
- ICC lacks an independent enforcement mechanism
- Non-members (e.g., US, Russia) are not bound to cooperate
- Political and diplomatic constraints hinder the execution of warrants
- Special Mechanisms: ICC established an Arrest Working Group (2016) to enhance warrant enforcement through better intelligence-sharing.
| [UPSC 2019] Consider the following statements:
1.The International Criminal Court (ICC) has jurisdiction to prosecute nationals of even those States that have not ratified the Rome Statute.
2. The International Criminal Court is a ‘court of last resort’ intended to complement national judicial systems.
3. The United Nations Security Council can refer a situation to the Prosecutor of the ICC even if the State concerned is not a party to the Statute.
Which of the statements given above are correct?
Options: (a) 1 and 3 only (b) 2, 3 and 4 only (c) 2 and 4 only (d) 1, 2, 3 and 4* |
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Why in the News?
Recent U.S. domestic policies on universities, companies, and immigration are causing short-term economic pain for India. However, they also offer long-term strategic opportunities. These changes may indicate the end of Pax Americana.
Why do U.S. policy shifts offer both risks and opportunities for India?
Opportunities for India:
- Manufacturing Opportunity: As U.S.–China tensions disrupt global supply chains, India can attract companies looking to diversify production. Eg: Apple shifting iPhone assembly to India reflects the country’s growing role as a China+1 manufacturing hub.
- Chance to Implement Bold Domestic Reforms: With reduced global dependence, India can focus on strengthening its internal systems through deregulation, decentralisation, and investment in human capital. Eg: A proposed 180-day plan calls for cutting compliance burdens, empowering state governments, and granting autonomy to top institutions like IITs and IIMs.
- Higher Education and Innovation Ecosystem: As American universities face political and financial pressure, India can position its institutions as global research and innovation leaders. Eg: Granting “poorna swaraj” (full autonomy) to institutions like IISc, Ashoka, and IITs can help them climb global university rankings and drive home-grown R&D.
Risks for India:
- Decline in Remittances and Student Enrolment: Stricter U.S. immigration and visa policies can reduce the flow of Indian students and workers, affecting remittances and global exposure. Eg: H-1B visa tightening under Trump led to fewer Indian tech workers entering the U.S., impacting remittancesand brain circulation.
- Disruption to Exports and Supply Chains: Protectionist trade measures and tariffs can disrupt India’s export-dependent sectors like software, pharmaceuticals, and electronics.
What impact has U.S. research and immigration had on India’s growth?
- Skilled Immigration: Indian immigrants in the U.S. contribute significantly to tech and scientific advancement, creating reverse knowledge flow to India. Over 70% of H-1B visas (2022) were granted to Indians, many of whom later founded companies or returned with expertise. Eg: Infosys, Wipro, and TCS have benefited from U.S.-trained professionals in leadership and innovation roles.
- High Remittances Fueling Economic Stability: Indian diaspora in the U.S. contributes a major share of remittance inflows, supporting India’s foreign exchange reservesand rural economy. According to the World Bank (2023), the U.S. contributed over $23 billion in remittances to India, nearly 25% of India’s total remittance receipts.
- Advancing Indian R&D and Education: U.S. federal funding has indirectly boosted India’s scientific growth through collaborations and return migration. The National Institutes of Health (NIH) funded research contributed to 99% of new drugs approved between 2010–2019. Eg: Indian researchers trained in U.S. labs or funded via U.S.-India Science and Technology Forum (USISTEF)have driven innovation in biotech, vaccines, and AI in India.
What does a weakening Pax Americana mean for India’s strategy?
Pax Americana refers to the period of relative global peace and stability under the dominance of the United States, particularly after World War II.
- Push for Strategic Autonomy and Multipolar Engagement: As U.S. dominance declines, India must strengthen ties with multiple global powers while maintaining independence in foreign policy. India’s active role in BRICS, QUAD, and IMEC reflects efforts to diversify strategic partnerships and avoid overdependence on any one nation.
- Accelerated Domestic Reforms for Economic Resilience: With global uncertainty, India needs internal strength through deregulation, decentralisation, and investment in infrastructure and skills. PLI schemes, Digital Public Infrastructure, Make in India, and self-reliance efforts show a move toward economic resilience.
- Enhanced Role in Global Governance and Norm Setting: A weakening U.S. opens space for India to shape the global agenda in climate change, digital governance, and international trade. India’s G20 presidency and promotion of Digital Public Infrastructure as a global good underline its leadership in global norm-setting.
What are the key reforms that can boost India’s global economic standing? (Way forward)
- Simplification: Simplifying regulations for employers by reducing compliance burdens, redundant filings, and removing criminal penalties in business laws can foster a more business-friendly environment. A focused 180-day plan to cut red tape would significantly improve ease of doing business and attract global investors.
- Decentralisation: Decentralising power to States and cities by transferring funds, functions, and personnel empowers local governments to drive regional economic development. This enhances capacity for targeted innovation and creates globally competitive manufacturing ecosystems.
- Autonomy: Empowering higher education and research institutions like IITs, IISc, and IIMs through full autonomy allows them to innovate, form global collaborations, and improve their position in international rankings.
Mains PYQ:
[UPSC 2018] How would the recent phenomena of protectionism and currency manipulations in world trade affect the macroeconomic stability of India?
Linkage: The rise of protectionism, which can be associated with policies like “Make America Great Again” mentioned in the article, signifies a shift in global trade dynamics. This question asks about the impact of such phenomena on India’s macroeconomic stability, underscoring the need for India to adapt and strengthen its economy in response to these global changes.
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Why in the News?
The Indian government recently claimed that India is among the world’s most equal societies, citing a Gini Index of 25.5 from the World Bank’s Poverty and Equity Brief, which would place India as the fourth most equal country globally. However, this claim has sparked debate and criticism from economists and inequality researchers.
What is the Gini Index?
The Gini Index (or Gini coefficient) is a statistical measure of inequality within a population. It is commonly used to measure income or wealth inequality, but can also be applied to consumption inequality. |
What are the flaws in using consumption-based Gini to measure inequality?
- Underestimates Real Inequality: Consumption is usually smoother than income because high earners tend to save more rather than spend proportionately. This leads to an underestimation of inequality. Eg: A billionaire may consume modestly while saving most income, appearing similar to a middle-class consumer in surveys, but with vastly different wealth.
- Poor Cross-Country Comparability: India uses consumption-based data while most other countries use income-based Gini, making international comparisons misleading. Eg: India’s Gini of 25.5 (consumption-based) appears more equal than OECD countries, but income-based Gini (62) shows much higher inequality.
- Low survey participation: Surveys often miss the richest due to non-response or sampling issues, failing to reflect the real inequality they contribute to. Eg: The richest 1% earn disproportionately more, but their low survey participation leads to underreported inequality.
Why is the World Inequality Database seen as more reliable?
- Uses Income and Wealth Tax Data: Unlike consumption surveys, WID incorporates income tax and wealth tax data, which captures the top 1% of earners often missed in surveys. Eg: WID shows India’s income Gini Index rose from 52 in 2004 to 62 in 2023, revealing growing inequality missed by consumption-based metrics.
- Captures Extreme Disparities: WID focuses on distributional national accounts, helping identify disparities between the top 10% and bottom 50%, which Gini often misses. Eg: In 2023-24, the top 10% in India earned 13 times more than the bottom 10%, a gap accurately captured by WID.
- Global Comparability and Peer Review: WID data is transparent, methodologically standardised, and peer-reviewed by global economists, making it a trusted source for cross-country comparison. Eg: Countries like France and the US use WID for policy framing on progressive taxation and redistribution.
What are the alternatives to the Gini Index that better reflect extreme disparities?
- Palma Ratio: The Palma Ratio compares the income share of the top 10% to that of the bottom 40%, focusing directly on income inequality between the rich and poor. Eg: In countries like South Africa, the Palma Ratio highlights stark disparities that are often missed by the Gini Index.
- Theil Index (Generalized Entropy Measures): The Theil Index allows for decomposition of inequality within and between population groups like rural vs urban. Eg: In Brazil, it has been used to analyze racial and regional disparities more precisely than the Gini Index.
What are the policy risks of underestimating inequality?
- Misguided Policy Design: When inequality is underestimated, governments may prioritize growth-focused policies without ensuring inclusive development. This can lead to insufficient investment in social protection, health, and education for marginalized groups.
- Widening Socioeconomic Gaps: Underestimating inequality allows elite capture of resources and opportunities, worsening wealth concentration. This can deepen inter-generational poverty, especially for rural, low-caste, and female-led households.
- Social and Political Instability: Failure to address real inequality can fuel public discontent, protests, and even extremism. It undermines trust in institutions and weakens democratic legitimacy over time.
What are the policy risks of underestimating inequality?
- Misguided Policy Priorities: Underestimating inequality leads to policies focused only on aggregate growth, neglecting equity. Eg: India’s high GDP growth often overshadowed poor social investment in rural health and education, worsening human development gaps.
- Weak Targeting of Welfare Schemes: If inequality is not accurately measured, social protection may miss the truly needy. Eg: Exclusion errors in schemes like PDS or PM-KISAN arise because top income groups are not properly excluded due to lack of granular data.
- Rising Social Unrest and Distrust: Ignoring inequality can result in resentment, protests, and political instability. Eg: Farmer protests in India reflected deeper rural-urban income divides and perceived neglect of smallholder concerns.
Way forward:
- Improve Data Collection Methods: Strengthen surveys by combining consumption data with income tax records, and ensure better representation of top income groups to capture true inequality.
- Adopt Comprehensive Inequality Metrics: Use alternative indicators like the Palma Ratio or income shares of top 10% vs bottom 50%, alongside the Gini Index, for a more accurate assessment.
- Design Inclusive Policy Frameworks: Align fiscal policies, welfare schemes, and tax reforms with accurate inequality data to target marginalized groups effectively and reduce social and regional disparities.
Mains PYQ:
[UPSC 2024] Despite comprehensive policies for equity and social justice, underprivileged sections are not yet getting the full benefits of affirmative action envisaged by the Constitution. Comment.
Linkage: This question critically examines the effectiveness of current policies intended to reduce inequality and promote social justice. It suggests that, despite official claims or stated objectives, the intended benefits are not effectively reaching the marginalised groups, thereby raising doubts about the actual progress in reducing inequality. It reflects the broader issue of implementation challenges in governance.
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