The Impact of Economic Inequality in India

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Posted on 3/25/2013
 Family in India

Vigilance Squad members Kawa Ram Kharadi, Kanji Lakhma Patelia and Mani Lal Kanji help protect children in their community, making sure they are not being exploited by the cotton industry. Photo by Jake Lyell.

India is the world's largest democracy, with a population of more than 1.2 billion people. Despite making substantial financial gains since the introduction of market-based economic reforms in the early 1990s, India continues to struggle with several major problems, including poverty, poor infrastructure and economic inequality. Although much progress has been made to tackle the social causes of poverty in India, millions of children face an uncertain future.

A Double-Edged Sword

The same regulatory reforms that enabled India's economy to grow so rapidly during the past 20 years have also had a serious impact on the nation's poorest citizens. According to a 2011 report published by the Organisation for Economic Cooperation and Development (OECD), income inequality has doubled in India since the early 1990s. The richest 10 percent of Indians earn approximately 12 times as much money as the poorest 10 percent, compared to roughly six times in 1990. India's economy is one of the fastest-growing emerging economies of any newly industrialized nation in the world, but other countries have made significantly more progress in addressing income inequality.

"Brazil, Indonesia and, on some indicators, Argentina have recorded significant progress in reducing inequality over the past 20 years," according to the OECD report. "By contrast, China, India, the Russian Federation and South Africa have all become less equal over time."


Prabhulal (in blue),12, was trafficked to a neighboring district and spent two months away from home before being safely returned thanks to the help of the Vigilance Squad. Photo by Jake Lyell.

ChildFund has worked in India since 1951 and remains committed to fighting child poverty in the country. Despite the introduction of many initiatives to address the social causes of poverty, there is much work to be done. The OECD report revealed that poverty reduction programs have been less effective than previously thought and also suggested that 42 percent of the Indian population lives below the poverty line.

Serious Consequences

The causes of income inequality are highly complex and dependent on a range of factors, and the effects are damaging to vulnerable populations, especially the young. Children born to parents in low income areas are at higher risk of child mortality and disease. According to data from UNICEF, 28 percent of Indian children born between 2006 and 2010 were underweight at birth, and approximately 48 percent of children under the age of 5 were affected by moderate to severe growth stunting as a result of malnutrition.


Shakuntala (second from left) escaped child labor and became a leader in her community.

Through government initiatives and the work of ChildFund and other nongovernmental organizations, conditions are gradually improving. Data from UNICEF suggests that 88 percent of Indians living in a rural area had access to improved drinking water in 2008, and more than 20 percent of rural Indians had access to better sanitation facilities in during the same time period. Although these gains are encouraging, there is still more that can be done to improve the lives of children living in India's poorest communities.

One of the best ways you can help ChildFund fight child poverty is by donating to our Dream Bike campaign. Providing children living in rural areas with the means to get to school and receive an education, this program aims to supply 800 schoolgirls in India and Sri Lanka with bicycles. To date, we have funded more than 600 bicycles.

Another way you can get involved is by purchasing a gift from our Real Gifts Catalog. With so many ways to give, including helping us provide water filters for an Indian school and medical checkups for children with disabilities, our catalog enables you to help us fight child poverty and offer children a brighter future.