Educational Policy for Income Inequality in India

Introduction

The history of economic growth in India is now often perceived through the lens of social disruption. While the overall view of the developing country may suggest that the economy of India is booming, a closer look at the state’s communities reveals a growing divide between the richest and the poorest people. The latest decade of such increase in prosperity and poverty has been compared to the United States’ Gilded Age which the country entered after the Civil War.

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Crabtree (2018), for instance, notes that the path which India has chosen now furthers the distinction between classes and creates more opportunities for people with high incomes to gather even more financial wealth than before. On the other hand, individuals and families with limited resources suffer from barriers to resources which affects their future aspirations (Dehejia, 2018; Genicot & Ray, 2017). The difference between the incomes and the inequality of conditions in which people live further exacerbate the instability of India’s economy.

Thus, the issue arises that enquires which policies may be necessary for the country to reduce its economic divide. One may consider multiple approaches, but all of them require some research on the causes that lead to the unstable implementation of capitalism in the developing state. Among various suggestions and proposed reforms, it is possible to outline an option that affects the economic future of India most directly since it is focused on the youth.

Policies related to education are advised as a way to reduce inequality in India – they do not address the economic state explicitly, but they may significantly alter this sphere. Mass education challenges the ideologies of people from all backgrounds, as well as provides impoverished people with an ability to improve their financial state while addressing the issues related to ethnic, socioeconomic, and gender inequality.

Research Question

The introduced research question considers the ways in which external causes influence income inequality in India and the country’s overall state of the economy with the focus on future changes. There are many ways in which the financial situation of the nation may be analyzed. Some people focus on political reforms that challenge corruption, while others address the idea of taxes being imposed on the most prosperous Indian citizens and reduced for the poorest parts of the nation. However, the notion that some global actions such as education may mitigate economic issues is also a vital part of changing the country’s development patterns.

In fact, the concept of change being encouraged from the youngest generations is likely to be highly influential in many instances. In their research, Uslaner and Rothstein (2016) show how the ideas of education and corruption may be connected, for example. Thus, this research question is formed to relate these ideas to each other and to implement them in the case of India’s economy.

Topic Relevancy and Current Problem

Apart from explaining why education may be linked to economic inequality, it is also vital to understand why India needs these studies in the first place. According to Dehejia (2018) and Crabtree (2018), India is currently undergoing changes that are similar to the ones that happened to the U.S. in the Gilded Age. During this time, the Western country has experienced rapid growth in production and economic prosperity which, however, led to a sharp separation between the rich and the poor. In India, the same problem has risen, and it persists to this day – poor people’s income does not decrease, but it also does not improve.

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As a contrast, the wealthiest people multiply their revenues, thus increasing the divide between the classes. In the years from 2006 to 2015, billionaires have started acquiring six times more wealth than before, while hired employees’ pay have not increased for more than 2% (“Income inequality gets worse,” 2018, para. 4). These numbers indicate an apparent discrepancy that affects all sides of people’s lives apart from the country’s economy as a whole.

The shift to the increase in wealth and people’s separation into classes has been discussed for approximately a decade. Moreover, the problem continues to affect the population as its 1% of wealthiest persons is the owner of more than 70% of all wealth in the state (“Income inequality gets worse,” 2018). This situation does not signify a growing economy but the opposite of improvement. Although the banks and the government may have more liquid capital that moves between industries, manufacturers, and businesses, it is occupied by a small number of people who make rather dangerous decisions and harm the economic stability in the long term.

The system implemented in India at the moment fails to supply the majority of its population with resources for basic survival, not considering the means of life improvement such as healthcare and education. Minimal wage workers who are responsible for producing vital resources cannot afford safety and comfort, thus experiencing high levels of uncertainty in their future.

The need to fix the problems of India through government action is highlighted by scholars. Policies are proposed as a way to regulate the unstable economic situation which places some people above others because of their financial prosperity. Government-induced changes have an opportunity to introduce changes that will provide the necessary limitations to those who currently have a significant influence on the market. Furthermore, they should introduce strategies for poor people to overcome and eliminate existing barriers.

After analyzing the currently active systems in India, it becomes clear that the topic discussing the inequality of people in the state is highly relevant to contemporary economic research. Moreover, this pressing issue requires more attention each day because of the difference between poor and rich people affects the country’s economy, politics, social tensions, and even the environment. As the main concern relates to the ways of fixing income inequality, future considerations and policies should be investigated and proposed. The idea of education being a catalyst for change, as an outcome, should be assessed in order to determine its potential.

Conceptual Framework

The main idea behind the proposed research question is formulated on the basis of a framework that is introduced by Uslaner and Rothstein (2016). The scholars also use a theory which implies that “a change from corrupt particularism to ethical universalism” is beneficial for a population (Uslaner and Rothstein, 2016, p. 234). In this case, education is not seen as a general sense of teaching people new information. Instead, the authors consider free learning opportunities that are accessible to all members of the population. Universal education is a policy that, according to Uslaner and Rothstein (2016), serves as a robust foundation for reforms of the country’s economic and political situation.

The present research adopts this framework in order to see whether India can benefit from universal education. Moreover, this concept suggests specific changes to the economy which will be father discussed in the literature review. However, it is essential to note why these alterations are expected of the country. First of all, Uslaner and Rothstein (2016) argue that the implementation of free education influences the public’s perception of the government. People believe that their country is focused not on a particular goal that can be achieved only by a small number of rich people. Instead, the state firmly trusts in its citizens to move forward towards the common good together.

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This is the first implication that creates political advantages without directly addressing economic policies. Secondly, the education itself is seen as a source of positive change. Higher education, in particular, produces professionals who can acquire profitable and stable jobs, leading the economy into a more service-focused and less resource-reliant infrastructure. Finally, training of all people promotes equality and social change that creates different ideologies of money, wealth, prosperity, and values.

Literature Review

First of all, it is required to address the findings that describe India’s current situation in more detail. According to Crabtree (2018), the idea that India’s problems are similar to the United States’ Gilded Age is based on a number of implications. The author compares the super-rich of India to those in America, noting, however, that India based its growth on the industrial system, while the U.S. overwhelmed insurance companies and banks (Crabtree, 2018).

Crabtree (2018) also mentions how current issues of wealth-hoarding and cronyism are reminiscent of America’s rise of corporations after the Civil War. Here, the focus on industries is notable in regards to the present research – it outlines the lack of education requirements in many professions exploited by the system. At the beginning of the twentieth century, the educated elite was the group that first was exposed to an increase in wealth (Crabtree, 2018). However, the later investments ignored such spheres as community education and healthcare, thus neglecting social improvement in favor of financial growth. The social aspect, as a result, was completely overlooked which contributed to inequality and led to resource limitations for people.

The scholar indirectly supports the proposed framework by introducing the problem of upper-middle class creating barriers of entry for other people in such spheres as urban life, education, and technology use. Crabtree (2018) notes that Indian billionaires do not invest in worker’s lives, instead limiting innovation and improvement to highly urbanized areas where the rich live. The increase in inequality, is, therefore, induced not just by the lack of resources but their inaccessibility by poorer parts of Indian society. As an outcome, the gap continues to widen and create classes that differ not only in financial but also health- and training-related positions.

These ideas are supported by the most business publications which discuss how the rich in India influence the country’s economic and political decisions. One of many authors, Dehejia (2018) proposes an idea that Indian billionaires act similarly to “robber barons” of the U.S. These people, at some point, contributed to the growth of economy but also implemented the system of corruption and inequality based on one’s earnings and socioeconomic background.

The role of education in such economic situations is considered to be vital by many scholars. Autor (2014) suggests that there exists a link between skills and earnings, proposing an idea that inequality in access to learning creates a similar divide in people’s wages. The scholar also argues that industrialized countries are particularly susceptible to this problem in the modern world. According to Autor (2014), the wage gap has significantly increased not only between the rich and the poor but also between people with and without higher education. As it can be seen in Figure 1, the earnings of people with a diploma have grown significantly, although the difference between men and women also became apparent.

The author explains that the evolving market with the addition of global trade has affected developed countries where unskilled labor is no longer deemed valuable. Nonetheless, this change also had an impact on developing countries where this labor was now used in exploitative ways. Thus, the living conditions of the poor did not improve, and their access to education became restricted by the overwhelming need for cheap labor.

College/High School Median Annual Earnings Gap
Figure 1. College/High School Median Annual Earnings Gap (Autor, 2014, p. 849).

The connection between education inequality and the income gap, therefore, are directly correlated with each other. Autor (2014) finds that market-based capitalism that does not result in economic mobility (a model that can be attributed to India) results in increasing inequality and social instability. Furthermore, the scholar suggests that opportunities for people of all backgrounds that are focused on providing them with knowledge and professional skills lead to the elimination or decrease of the gap and create a more stable economy. While this change does not produce quick results, it has long-term benefits for the country as a whole and for people who may suffer under the current system.

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The findings of Autor (2014) are also supported by Uslaner and Rothstein (2016) who implement the learning-based idea into research of both developed and developing countries. The researchers discover that the implementation of universal education is linked to societies that regulate corruption effectively. Moreover, countries with mass learning programs rank higher than others in regards to having a robust economic system.

Uslaner and Rothstein (2016) provide statistical analyses which reveal that corruption levels and education are highly correlated, especially noting that people who spend more years in school also have more power over the economy. While this link does not imply that education will solve all problems that developing nations may have due to income inequality, it shows how learning may improve people’s understanding of the financial world. More than that, Uslaner and Rothstein (2016) argue that mass education elevates people from all socioeconomic backgrounds and lowers the rate of separation among the population.

The authors also connect exploitation of colonized nations and lower levels of exposure to the quality of education. Uslaner and Rothstein (2016) provide such examples as India being colonized by the British. The colonizers that utilized cheap labor did not contribute to mass education, keeping the nation employed for their needs instead. Other instances such as the native peoples of Uruguay also showed similar results, being forced into unskilled jobs, while other regions and people acquired access to learning. Therefore, the history of education has laid a foundation for communities to possess different values in the capitalist market which have persisted after India became independent.

The economic manipulation of colonialism affected the country through education along with other limitations. The authors find that India was among the nations with the shortest duration of mean school years, showing high levels of corruption as well.

The impact of politics on education is also a vital contributor to inequality among people of different socioeconomic backgrounds. This idea is proposed by Krafft and Alawode (2018), who explore such countries as Jordan, Egypt, and Tunisia. The authors find that higher education is much more restricted for people from lower economic classes. Notably, the scholars adjust their results to exclude the factor of scores.

They reveal that high scores are not as detrimental to people’s acceptance into schools as their economic situation. Furthermore, Krafft and Alawode (2018) argue that the countries where schools are publicly funded (Tunisia and Egypt) are currently receiving less financial support than before which leads to the decrease in equality among attending and potential students. Here, the research relates to the explored topic since Krafft and Alawode (2018) show how higher education is restricted in places where social support is lowered while the concept of merit is accepted. Here, the connection between capitalism-based beliefs and the rapid expansion of the rich is revealed.

Thus, limited socioeconomic mobility creates inequality which is further exacerbated by the lack of funding for people from lower class households. Krafft and Alawode (2018) show how education can affect the growth of the economy. At the same time, the authors suggest that the financial decisions of countries have a substantial impact on people’s education. The link is a circle in which all factors influence each other. As a result, Krafft and Alawode (2018) reinforce the idea that mass education is vital for the economic stability of developing countries. Such rapidly changing states need to balance their personal growth and external relations with developed countries.

Studies that specifically research the effect of education on India come to conclusions about the present and the future of the nations’ economy that are similar to those of Uslaner and Rothstein (2016). Kayet and Mondal (2015) examine the expenditures of rural Indian territories on public education and the connection of these programs to income inequality in these areas. The scholars find a positive correlation between these two variables, noting that states which contribute more money to learning initiatives and schools than others have reduced rates of income inequality.

Interestingly, they utilize the two main approaches of Indian politicians – relative inequality and absolute inequality, covering both ideologies expressed by the “left” and “right” sides of the political debate. According to the first view, inequality considers the overall growth of income, while the second point focuses on the increase in the wages of the poor, in particular. Kayet and Mondal (2015) find that, in both instances, the link between education expenditures and decreasing inequality is positive. The income grows for all people because all of them receive an education, thus being able to perform better than before.

This research suggests that policies for mass education are vital for relieving the current crisis that affects all regions of India. Kayet and Mondal (2015) argue that policy-based support of schools and wider access to learning should supply the population with the necessary resources to improve the state of the economy in the long term. The authors also propose that the gap’s change will not decrease the overall financial development but help the poor part of the population to raise their level of life, thus eliminating related problems. The conclusion of this study highlights the importance of raising the financing of schools in rural districts in order to solve the problem of the “Billionaire Raj” – the phenomenon of rich people designing self-helping rules.

Another interesting study connects education, income, and political outcomes for India. Huber and Suryanarayan (2016) argue that one’s socioeconomic status in India affects the way they perceive the political situation in the country and with which party are they more likely to affiliate themselves. The authors find that a correlation of such factors as income, education level, and party affiliation is strong. Huber and Suryanarayan (2016) note that professional training has been gaining more significance in the country during the last decade, as many people start using technology or participating in industries other than agriculture.

Thus, people’s income also becomes tied to their level of education. The authors compare the outcomes of higher education and people’s access to goods such as phones and clothes. They find that the former’s analysis yields a stronger connection with inequality than the latter. Huber and Suryanarayan (2016) explain that skill acquisition is a better indicator of wealth in the long term in contrast to purchased goods since it usually results in people acquiring well-paid jobs. As a result, inequality between those who obtain higher education and those who do not grows as well.

A conclusion to which the scholars come is also interesting because they propose that ethnic voting is correlated to the mentioned above aspects. Specifically, areas of India where levels of inequality are extremely high have the most ethnically-driven bases for voting. Therefore, Huber and Suryanarayan (2016) argue that class differences also contribute to voting results that are not based on political campaigns focused on economics but on the participants’ ethnic background. Here, the problems of economic changes are grossly overlooked or misrepresented by parties depending on their foundational beliefs.

Finally, a study by Jerrim and Macmillan (2015) investigates an approach called the Great Gatsby Curve (GGC). This concept suggests that states where income inequality reached great levels have communities with low intergenerational mobility. The authors propose an education-based solution and investigate its potential to reduce the rates of immobility and inequality. Jerrim and Macmillan (2015) conclude that education of both parents and children is the main driving force behind the offspring’s growing income. Moreover, they find a stronger connection between learning and inequality reduction than inequality and financial returns.

This signifies that apart from providing people with professional skills, education may also improve other parts of people’s lives. The authors also stress that developing countries which do not invest in public education have higher rates of inequality than others (Jerrim & Macmillan, 2015). Therefore, the need to supply the nation with mass learning opportunities arises as a result.

Evidence Analysis

The academic findings analyzed above show how the introduced framework can assist India in overcoming its problem of income inequality. The studies address both an overall connection of education and economy and the outcomes that some initiatives can have on India. A particularly interesting consequence is expressed in the work of Uslaner and Rothstein (2016) who link mass learning to reduced levels of corruption.

Notably, India is also suffering from the absence of legal control over the business of the so-called “Bollygarchs” – Indian class of billionaires. According to Linge (2018), these people do not invest in the social infrastructure of the country, focusing on their personal concerns and wishes instead. This phenomenon is not unique to India – research has shown that countries with high inequality rates produce rich people with high levels of greed and self-centered views (Piff, 2014). In India, nonetheless, these billionaires often live in close proximity to the poorest people of the state.

Sometimes, this divide is visually represented, representing the stark difference between the richest and the most impoverished communities. Mukesh Ambani, the wealthiest man in the country, lives in a skyscraper with entire floors dedicated to pools, gardens, single-person apartments, and garages (Linge, 2018). Out of this lavish building, however, one can see one of the largest slums in the country, since the skyscraper is located in Mumbai, a city with the most apparent divide between classes. Here, the separation between the current conditions of the two communities becomes undeniable.

The introduced scholarly works show that these particular environments are exposed to corruption. Most importantly, they are unstable – while the rich currently propel some sectors of the economy, their relationship with the lower class creates disturbances which are bound to unbalance the economy and lead to devastation if not fixed. The scholars who propose mass education as a financial reform to reduce inequality do not deny that this change is not a universal solution of all economic problems of developing countries. At the same time, they suggest that learning can lead to many positive outcomes that will bring long-term effects.

Expected Outcomes

Based on the discussed research, one can formulate a number of results that may be expected of the country if it introduces policy changes. First of all, it is essential to note which particular reforms are proposed. Mass education is an initiative that will provide all people with school and university or professional education, and individuals will receive it regardless of their economic abilities.

This policy requires substantial amounts of financing which means that the country’s government should not wait for short-term successes. The budget of government support should be focused on schools in the regions where the majority of children and adolescents cannot afford education. As proposed by Kayet and Mondal (2015), increased support of rural states is vital for the results of this policy. According to Jerrim and Macmillan (2015), these territories are often ignored by governments especially if the latter work in the environment of economic inequality. The initiative includes resources for schools as well as people since the places of education should be equipped as well.

As one of the outcomes, India can expect an increasing number of highly-skilled professionals entering the market. The expansion of education will provide people with the ability to compete for stable jobs with higher income.

However, it does not mean that industries with unskilled labor will suffer from the lack of workers. One of the potential results of education is the change in production methods, as research-driven individuals are likely to reform the industry and provide technological advancements that will improve the state of labor instead of diminishing its importance. One should note that all studies suspect that education will also improve social mobility (Jerrim & Macmillan, 2015). This suggests that currently, disadvantaged people will be able to choose other professions and acquire more finances to satisfy personal needs.

Furthermore, the education of citizens may lead to changes in aspirations. Genicot and Ray (2017) find that people who have greater confidence in their future tend to design investment-driven goals. The authors also suggest that higher aspirations which may be expressed by rich people with a tendency to make reckless decisions lead to frustration. Thus, a contrast between stable growth and inequality is highlighted for long-term changes. Genicot and Ray (2017) use India as an example of a country with unequal aims and goals that are primarily reliant on social factors. Inequality is found to be an aspect that exacerbates people’s unsteady expectations. A policy of mass education for rural communities may combat these issues and provide people with focused aspirations.

It should be noted that India is making steps towards improving its access to education. However, rural territories still struggle with enrollment rates, and the funding of public facilities is not enough to provide the students with programs that are adjusted for contemporary problem-solving. Thus, the primary outcome of the proposed policy is expected to considerably change the state of rural communities and their rise in professionalism. As an outcome, a different labor force may come out of the change, and people may be more likely to engage in skill-improving education.

Implications for Future Research

The research, while employing the information from many academic sources, still does not cover the topic entirely. It is vital to acknowledge that the proposed policy change should be researched in order to find specific measures which would result in the most effective use of federal resources. In India, income inequality should be addressed from other points as well, including increased taxes for the wealthy and governmental regulations of businesses.

The studies of these propositions should also connect education to their results in order to see how the system of change may affect India in the long-term. Furthermore, it is necessary to include some considerations of Indian history into the following research. While the current paper talks briefly about the colonial past of the country, the effect of the British Empire that is strongly correlated to the economy and inequality of India is not discussed thoroughly.

Global trade and the impact of contemporary relations with Western countries should also be considered when assessing the ways in which India can alleviate its most pressing concerns. The cheap labor that some countries and local businesses utilize is affected by international ties and contracts that may also be reviewed in relation to the policy of the country. Overall, political considerations are another field of research that may yield many interesting findings that will support or upgrade the presented results.

Finally, the state of rural schools in India and its impact on the economic situation in these territories can be explored further, focusing on the inequality of genders as well as education. As noted above, the earnings gap found by Autor (2014) happened at the same time when a gender difference started becoming more apparent. In Indian schools, these two aspects are connected as well, especially in rural settings. The implications of a policy that addresses both socioeconomic characteristics and gender in education may propose some additional support for social change.

Conclusion

The state of the economy in India continues to be closely tied to the concept of the Billionaire Raj. Government regulation in the fields of business and tax is lacking which leads to inequality between the rich and the poor in the country. Currently, the richest 1% of the nation possesses more than 70% of the wealth. This divide is also apparent in economic research which warns about the adverse outcomes of such unstable growth.

While the general view of the Indian economy may suggest a positive change, a closer look reveal the growing issue of the rich increasing their incomes and the poor suffering from barriers to essential resources. Thus, some considerations for future change should include state policy and its possible effect on the income gap. The proposed framework views the current problem of inequality through the lens of opportunity, connecting mass education in rural regions with lowered rates of corruption. Moreover, it confirms that learning leads to high social mobility and industry reform.

The results of analyzing recent studies show the significance of acknowledging rural territories and their potential for education. The assessment of findings reveals a strong correlation between reduced corruption, leveled income levels, and political reforms which follow after the government improves the state of education programs for all people. These and other massive economic benefits are reachable through long-term initiatives. As a result, the country’s wealth should not deplete but rise and India should foster a stable economy that does not rely on a small number of people whose decisions are often dangerous and self-centered. To conclude, rural mass education policies may substantially reduce economic inequality by increasing the number of professionals and reforming industries.

References

Autor, D.H. (2014). Skills, education, and the rise of earnings inequality among the” other 99 percent”. Science, 334(6186), 843-851.

Crabtree, J. (2018). The billionaire Raj: A journey through India’s new Gilded Age. New York, NY: Tim Duggan Books.

Dehejia, V. (2018). Is India living through a new ‘gilded age’? Livemint. Web.

Genicot, G., & Ray, D. (2017). Aspirations and inequality. Econometrica, 85(2), 489-519.

Huber, J. D., & Suryanarayan, P. (2016). Ethnic inequality and the ethnification of political parties: Evidence from India. World Politics, 68(1), 149-188.

Income inequality gets worse; India’s top 1% bag 73% of the country’s wealth, says Oxfam. (2018). Business Today. Web.

Jerrim, J., & Macmillan, L. (2015). Income inequality, intergenerational mobility, and the Great Gatsby Curve: Is education the key? Social Forces, 94(2), 505-533.

Kayet, A., & Mondal, D. (2015). Effects of public school education expenditure on income inequality: Evidence from 15 major States of rural India. Scholars Journal of Economics Business and Management (SJEBM), 2(10A), 1021-1031.

Krafft, C., & Alawode, H. (2018). Inequality of opportunity in higher education in the Middle East and North Africa. International Journal of Educational Development, 62, 234-244.

Linge, M. K. (2018). How India’s most obscene billionaires spend their money. New York Post. Web.

Piff, P. K. (2014). Wealth and the inflated self: Class, entitlement, and narcissism. Personality and Social Psychology Bulletin, 40(1), 34-43.

Uslaner, E. M., & Rothstein, B. (2016). The historical roots of corruption: State building, economic inequality, and mass education. Comparative Politics, 48(2), 227-248.

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StudyCorgi. (2021, July 18). Educational Policy for Income Inequality in India. Retrieved from https://studycorgi.com/educational-policy-for-income-inequality-in-india/

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