What should the government do to address deepening inequality?

 A recent survey claimed that the annual income of the poorest 20% of Indian households dropped by 53% in 2020-21 from their levels in 2015-16. This report tries to delve into the reasons behind it

As the Budget session is drawing closer, calls to address the growing inequality is also becoming louder. For long, critics have been citing inequality numbers to bring home the point. However, this year, something has changed. For one, the numbers are staggering. They reflect how the Covid-19 pandemic has upended years of progress India had made in addressing this systemic problem.

In the latest round of the ICE 360 Survey 2022, conducted by the People Research on India’s Consumer Economy, it was found that the annual income of the poorest 20% of Indian households — which was constantly rising since 1995– plunged 53% in the pandemic year 2020-21 from their levels in 2015-16. In the same five-year period, the richest 20% saw their annual household income grow 39%. India’s K-shaped economic recovery is deepening societal fault lines along the lines of income and expenditure. Automakers are beefing up their SUV portfolio but sales of two-wheelers are at their lowest in nine years.