Daily Current Affairs : 10-January-2024

The recently published SBI Research report sheds light on encouraging developments in income inequality within India. According to the report, there has been a noteworthy decrease in the Gini Coefficient, a key metric for assessing economic disparity.

Key Findings:
  1. Declining Gini Coefficient:
    • The Gini Coefficient has decreased from 0.472 in the Assessment Year (AY) 2014-15 to 0.402 in AY 2022-23, indicating a positive shift towards more equitable income distribution.
  2. Increasing Tax Base:
    • Data from the Central Board of Direct Taxes (CBDT) indicates a widening income tax base. The number of individuals filing Income Tax Returns has risen from 70 million in AY 2021-22 to 74 million in AY 2022-23, reflecting broader economic participation.
  3. Improving Upward Mobility:
    • The decline in income inequality is attributed to substantial upward mobility. Over 36% of individuals in the lowest income bracket in FY14 have moved to higher income levels, resulting in a remarkable 21% increase in their income during FY14-FY21.
  4. Rising Female Labor Force Participation:
    • The report highlights an encouraging trend of increasing female labor force participation, contributing to a more inclusive economic landscape.
  5. MSME Growth and Changing Consumption Patterns:
    • Positive trends are observed in Micro, Small, and Medium Enterprises (MSMEs), challenging the traditional ‘K’ shaped growth pattern. MSME income is on the rise, and changing consumption patterns post-COVID are influencing a shift towards more equitable economic growth.
  6. Decline in Top Earners’ Share:
    • The share of top earners with incomes exceeding Rs 10 crores and Rs 100 crores has witnessed a decline from 2013-14 to 2020-21, signaling a redistribution of wealth.
Understanding the Gini Coefficient:

The Gini Coefficient serves as a statistical tool to gauge economic inequality, ranging from 0 (perfect equality) to 1 (perfect inequality). With values over 0.40 considered high inequality, the decline in India’s Gini Coefficient from 0.472 to 0.402 reflects a positive shift towards a more balanced income distribution.

Important Points:
  • Declining Gini Coefficient:
    • Gini Coefficient dropped from 0.472 in AY 2014-15 to 0.402 in AY 2022-23, indicating reduced income inequality.
  • Increasing Tax Base:
    • Income Tax Returns filings increased from 70 million in AY 2021-22 to 74 million in AY 2022-23, showcasing a wider economic participation.
  • Improving Upward Mobility:
    • Over 36% of individuals in the lowest income bracket in FY14 moved to higher income levels, with a 21% income increase during FY14-FY21.
  • Rising Female Labor Force Participation:
    • Positive trend in female labor force participation, contributing to a more inclusive economic landscape.
  • MSME Growth and Changing Consumption Patterns:
    • Positive trends in MSME income challenge the traditional ‘K’ shaped growth pattern.
  • Decline in Top Earners’ Share:
    • Share of top earners with incomes over Rs 10 crores and Rs 100 crores declined from 2013-14 to 2020-21, indicating wealth redistribution.
  • Understanding the Gini Coefficient:
    • Gini Coefficient ranges from 0 (perfect equality) to 1 (perfect inequality), and values above 0.40 are considered high inequality.
Why In News

According to a recent SBI Research report, income inequality in India has decreased, indicating a positive trend of upward mobility and the growth of the middle class. This shift is attributed to various economic reforms and social policies that have contributed to a more inclusive and equitable distribution of wealth across different segments of the population.

MCQs about Income Equality

  1. According to the SBI Research report, what does the decrease in the Gini Coefficient from 0.472 to 0.402 in AY 2022-23 suggest?
    A. Increased income inequality
    B. Decreased income inequality
    C. Unchanged income distribution
    D. Fluctuating economic conditions
    Correct Answer: B. Decreased income inequality
    Explanation: The drop in the Gini Coefficient signifies a positive shift towards reduced income inequality.
  2. What contributes to the decline in income inequality according to the SBI Research report?
    A. Decreasing tax base
    B. Falling female labor force participation
    C. Upward mobility of individuals
    D. Stagnant MSME growth
    Correct Answer: C. Upward mobility of individuals
    Explanation: The report attributes the decline in income inequality to significant upward mobility, with over 36% of individuals in the lowest income bracket moving to higher income levels.
  3. What trend is observed in the share of top earners with incomes over Rs 10 crores and Rs 100 crores?
    A. Significant increase
    B. Slight decrease
    C. Steady growth
    D. Substantial decline
    Correct Answer: D. Substantial decline
    Explanation: A decline in the share of top earners with incomes exceeding Rs 10 crores and Rs 100 crores from 2013-14 to 2020-21, indicating wealth redistribution.

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