Journal Press India^®

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Fiscal policy has long been a central tool in addressing income inequality in India. Despite sustained efforts through taxation and public expenditure, disparities continue across regions, social groups, and income levels. This paper examines key fiscal instruments progressive and indirect taxation, welfare programmes, and subsidies and assesses their effectiveness in redistributing income. While progressive income taxes are intended to place a greater burden on high earners, indirect taxes such as the Goods and Services Tax (GST) tend to be regressive. Public spending on initiatives like MGNREGA, food security, education, and healthcare has benefitted lower-income populations, though administrative inefficiencies constrain their impact. Empirical data from 1950 to 2024, the study underscores the continued concentration of wealth among the top 10% of the population, driven in part by tax avoidance and the informal economy. Case studies of Kerala, Tamil Nadu, and Maharashtra illustrate varied outcomes of redistributive efforts. The analysis concludes that while fiscal measures have contributed to poverty reduction, deeper structural reforms are necessary to address entrenched economic inequality.

Keywords

Income inequality; Progressive taxation; Wealth distribution; Economic redistribution

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