Assessing inequality right: India needs the full picture to chart path to achieve SDG-10

To meaningfully address inequality, the government will now have to prioritise spending on job-creation that has taken a beating.

Viewed against the economic impact of the pandemic, nations’ efforts towards meeting the UN’s Sustainable Development Goals (SDGs) by 2030 have assumed even greater importance. To that end, the NITI Aayog’s 2020-21 SDG index reporting a six-point improvement in India’s score—from 60 in 2019 to 66 in 2020-21—on the back of better performance in clean energy, urban development and health, is certainly welcome news.

While Kerala retains its top rank, the fact that many of northern states continue to rank poorly despite improvements in scores for a clutch of indicators highlights the need for their respective governments and the Centre to carry out more focussed interventions in the region.

That said, the NITI Aayog needs to perhaps look at SDG 10—reducing inequality—in a more holistic manner. While the index reports gains on this count for the country (Bihar, Rajasthan, Nagaland and Uttar Pradesh show the highest levels of inequality despite this), there have been important changes with respect to the indicators considered. NITI, without doubt, has done well to focus on crucial social indicators like women’s representation in policy-making, crimes against SCs/STs, transgender labour force participation, etc, but, dropping earlier indicators that brought into stark relief the progress (or the lack of this) on reducing economic inequality doesn’t make the picture truly representative. In 2019, the NITI’s index included inequality indicators like the growth in household expenditure per capita for the bottom 40% of rural and urban populations, as well as the Gini index, a measure of wealth inequality.

In 2018, the index had also included the Palma ratio—which shows the gap between the richest 10% and the bottom 40%. These are all crucial indicators to have a more granular assessment of the current position of households in NITI’s only economic indicator of inequality this year—population in the two lowest wealth quintiles.

In a year where the pandemic has exacerbated the wealth gulf in the country, a true measure of economic inequality, you would assume, would be important to plan the course ahead. The continuing pain of MSMEs from last year and the stunning corporate gains mirror the pandemic impact for their respective dependent populations. What’s worse is that rural India, that was not as badly impacted in the first wave, has come under considerable pain this year.

Whether the rural wage build-up of the last fiscal will sustain this year is uncertain; this will show in rural demand, which many economists believe, could be muted. Apart from this, SDGs that have underlying indicators concerning wages and industrial growth reflect the fact that the economy has taken a beating, and, consequently, inequality would have risen—indeed, the country’s score on industry and infrastructure saw a sharp decline. To meaningfully address inequality, the government will now have to prioritise spending on job-creation that has taken a beating.