Q.What are the causes for inequalities in the distribution of income and wealth?

Income and wealth are unequally distributed in India mainly because property and productive assets are owned unequally, inheritance passes wealth down within families, people differ in education and earning ability, and unemployment, inflation and inadequate redistributive taxation widen the gap. This is a standard AP Intermediate 2nd-year Economics topic under the features of an underdeveloped economy.

Inequality in the distribution of income and wealth means that national income and national assets are shared very unevenly — a small group receives a disproportionately large share while a large section receives very little. The chief causes are as follows.

1. Unequal ownership of property and assets. Land, buildings, shares and other wealth are concentrated in relatively few hands. Those who own assets earn rent, interest and profit, which widens the gap over property-less workers.
2. Private property and the law of inheritance. The right to own property and to pass it on to heirs allows wealth to accumulate within the same families across generations.
3. Differences in education, skill and ability. Better-educated and more skilled people command much higher incomes, while the unskilled and illiterate are confined to low-paid work.
4. Unemployment and underemployment. Those without regular work have little or no income, pulling down the lower end of the distribution.
5. Inflation. Rising prices benefit traders, producers and property owners whose incomes rise with prices, but hurt wage-earners and fixed-income groups, so inequality increases.
6. Concentration of economic power. Large business houses and monopolies control a big share of industry and finance, earning high profits that add to the wealth of a few. …