We Really Need more Subsidies and Social Securities due to Adverse lncome Distribution.

Introduction 

The distribution of disposable income among different socio-economic classes is a crucial factor that affects overall economic growth and social well-being. In India, recent reports and studies provide insights into the trends and challenges related to disposable income and its impact on various classes. The following lines shows the challenges faced by the middle class and lower class in the last five years, as well as propose potential solutions.

Disposable Income Trends 

According to the Economic Survey 2022-23, average household income in India has increased since the pandemic, with the poorest 20% experiencing a significant jump of 75%. However, the growth is unevenly distributed, with the top 1% capturing 22% of the income growth, while the bottom 50% only received 13%. This widening inequality is concerning, especially when coupled with the impact of rising inflation on disposable income, particularly for the lower classes who spend a larger proportion on essentials.

Impact on Different Classes 

The middle class in India has displayed cautious optimism, as indicated by studies such as Deloitte's Global Consumer Tracker. However, they are focusing on essential and value-driven purchases, amid concerns about increasing expenses and job security. On the other hand, the lower class is facing more severe impacts, with increased food and fuel prices and stagnant wages significantly reducing their disposable income. This limitation on their ability to afford basic necessities deepens the challenges they face daily.

Challenges in the Last Five Years

The COVID-19 pandemic has caused widespread job losses, income disruptions, and increased healthcare expenses, disproportionately affecting lower-income groups. The large portion of the Indian workforce belonging to the informal sector also lacks social security, making them more vulnerable during economic downturns. Additionally, the persistent income gap between rural and urban areas creates challenges for rural populations relying on agriculture and facing volatile market conditions.

Addressing the Challenges 

To address the challenges faced by the middle class and lower class in India, specific policies are required. Targeted policies should focus on benefiting lower-income groups through direct transfers, subsidized essential goods, and skill development programs. Promoting inclusive growth is crucial, and policies should encourage equitable distribution of income growth and create more job opportunities in rural areas. Strengthening social safety nets, such as healthcare and unemployment benefits, can provide critical support during economic hardships.

The distribution of disposable income among different classes in India is an important factor that impacts overall economic growth and social well-being. The challenges faced by the middle class and lower class in the country include rising inflation, high and rising unemployment, and a complex taxation system. To address these challenges, targeted policies, inclusive growth initiatives, and strengthened social safety nets are necessary. However, it is important to recognize the complexity of this issue, the limitations of available data, and the need for a multi-pronged approach and continuous monitoring of its effectiveness.

References:

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