The impact of uneven growth will be seen on economic development

- The biggest problem with the concentration of wealth and income is that it will be difficult to maintain high economic growth if demand remains weak

Instead, the concentration of wealth and increasing inequality can affect economic growth. This can continue even when the country shows strong economic growth. Statistics show that inequality has increased in the post-pandemic recovery process. Given the weak improvement in demand at lower income levels, declining wages and the overall employment situation, the economic recovery appears uneven. Data from the National Statistical Office, the Reserve Bank of India and other sources show that rural India is still facing tough times while a section of corporate and urban India is faring better.

Data from the Statistics Office shows that between January 2022 and October 2023, rural retail inflation was higher than urban in 18 out of 22 months. Persistently high inflation, mostly due to food prices, monsoon and low production could weigh heavily on the rural economy and affect aggregate demand. Low average wages and disparity between states are adding to rural India's concerns. According to Reserve Bank of India's Handbook of Statistics on Indian States 2023, the average daily income of agricultural workers in the country in 2022-23 was Rs. was 345.7. This is an increase of seven percent annually. This is slightly higher than the overall inflation rate. Wages in rural areas of Madhya Pradesh, Gujarat and Maharashtra have grown at the slowest pace in the country. This has happened in both agricultural and non-agricultural sectors.

The rural economy is failing to generate enough employment opportunities. The demand for employment under the Mahatma Gandhi National Rural Employment Guarantee Act has increased by 10 percent by the end of October compared to the same period last year. According to an estimate, Rs 1.5 lakh crore will be required to provide just 50 days of employment to active families under the scheme, while the budget allocation is only Rs 60,000 crore.

Income and employment status are also reflected in the results of the companies. The share of the auto sector, including auto components, in net sales rose to a 10-quarter high during the July-September quarter. Meanwhile, the performance of consumer goods companies has declined. In the unlisted sector as well, according to reports, expensive brands in automobiles and other sectors are doing good business. The luxury market is also expected to perform well in the coming years.

However, what is disappointing is that the distribution of income and wealth is becoming centralized. For example, sales of expensive cars and expensive real estate as well as consumer goods of daily use that cater to the needs of the mass market should also increase. The biggest problem with the concentration of wealth and income is that it will be difficult to sustain high economic growth if demand in the broader market remains weak. Certainly many corrective measures can be taken immediately. The only way is to increase investment in the economy. It also has to be used in such a way that employment can be created for the growing labor force of the country. Measures like increased subsidies and cash transfers at the central and state government levels will not help much.