Human Development in India - NCAER

income, poverty, and inequality 23DISCUSSIONThis chapter has focused on the livelihoods of Indian familiesand identified some sources of vulnerability. Some of thefindings presented echo well articulated themes. Poverty andlow incomes are concentrated among Dalits and Adivasis,followed by Muslims and OBCs. Poverty also tends to begeographically concentrated in the central states.However, our examination of income and incomesources emphasizes some dimensions of economic well-beingthat have received less attention. Access to salaried incomeis one of the primary axes that divides Indian households.Households in which at least one adult has a job with amonthly salary are considerably better off than householdsthat rely solely on farming, petty business, or casual dailylabour. Unfortunately, only 28 per cent of households canclaim access to salaried jobs. This suggests that access tosalaried jobs and education (a prerequisite for salaried work)is a major source of inequality in household income—a topicaddressed in detail in Chapter 4 and 6.One of the most striking findings presented in thischapter is the great diversity of income sources withinIndian households. Nearly 50 per cent of the householdsreceive income from more than one source. Implicationsof this diversification require careful consideration. On theone hand, income diversification provides a cushion fromsuch risks as crop failure or unemployment. On the otherhand, the role of income diversification may depend onthe nature of diversification. Where households are able toobtain better paying salaried jobs, diversification may beassociated with higher incomes. Where poor agriculturalproductivity pushes household members into manual wagework, such as construction, the income benefits may belimited. This is a topic to which we return when we discussdifferent employment patterns of individuals in Chapter4. However, these data also indicate that regardless of theshare of agricultural incomes, a vast majority of the ruralhouseholds are engaged in agriculture, resulting in a highdegree of sectoral interdependence.This chapter also shows that inequality in income is fargreater than inequality in consumption. The higher inequalityfor incomes than expenditures is a common finding inother countries, but has been insufficiently appreciated inIndia. It will be important to track income inequality overtime because with rising incomes, inequality in incomes maygrow faster than inequality in consumption.HIGHLIGHTS• Median household income in urban areas is twice that in rural areas.• Dalit and Adivasi households have the lowest incomes, followed by OBC and Muslim households.• Salaried work provides the highest level of income.• Although 35 per cent of households engage in farming or animal care, cultivation accounts for only 19 per cent ofthe total income.• About 25.7 per cent of the population lives below the poverty line.• Inequality in income is considerably higher than that in consumption.