Journal Press India^®

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High Gini Coefficient has the potential of retarding Gross Domestic Product (GDP) of a country besides being socially corrosive. Piketty’s master piece ‘Capital’ (2014) has debunked the myth of Kuznets’ inverted ‘U’ curve hypothesis. A recent IMF note endorses his view point and has strongly pitched for redistributive justice through tax policy. Joseph Stiglitz’s recent book ‘The Great Divide’ also brings out strongly the need for effective reforms in our democratic framework so that each country can legitimately be proud of their shared prosperity. This paper takes an overview of literature on inequality since Ricardo (1817) and provides a flavor of multiple dimensions of global inequality and India’s experience post License Quota Permit (LQP) Raj. The paper brings out the difference in the trends of rural-urban income inequality, and the multidimensional deprivations that a vast swathe of rural population suffer from. It strongly recommends a more progressive tax rate structure, imposition of high wealth tax and handsome investment in quality education. For democracy to function effectively it has to be accountable to all. The paper echoes the concerns expressed in the World Economic Forum and calls for elimination of extreme inequality as a national goal, reducing Palma Ratio as the ninth Millennium Development Goal and eschewing crony capitalism.

Keywords

Gini Coefficient, GDP, Inverted ‘U’ Curve, LQP, Palma Ratio

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