Article: India's rural poor climb the economic ladder

For a long while, I thought income disparities in South Asia were making the gaps between rich and poor wider. Apparently, this article proves my knowledge wrong!

Some notable points copied below:

According to the NCAER, a new socioeconomic category, the rural rich, has emerged in India, creating a divide within the rural economy, as opposed to just the rural-urban income disparity.

The rural rich are 1,000 times more likely than rural poor to own a motorbike, 100 times more likely to own a color television and 25 times more likely to own a pressure cooker.

Many observers have also said that the reason China has progressed much faster is due to state-led capitalism that makes decision-making quicker. In India, democracy is seen to be a stumbling block to higher growth. However, it seems that the pulls and pressures of various vote banks, social class and caste of voters - inherent in a democracy - has ensured that the growth is more equitable, which is a much more sustainable trajectory.


n China, farmers, who, like in India, form the majority of the population, pay 300 different kinds of taxes. Between the mid- and late 90s, rural citizens saw their taxes go up 800%, when farm incomes rose by 90%.

Thus the consumption share in China has declined from around 50% of GDP in the 1980s to below 40% in 2005, which is completely out of sync with the high GDP growth due to large investments and exports.

In China, rural incomes on average have been a sixth of urban incomes, while a villager usually pays three times more in taxes than an urban-dweller. According to China's National Bureau of Statistics, the reduction in the tax burden due to reform/abolition of rural income tax is more or less balanced by rises in rural taxes on land, asset sales and inheritance. There's been no net relief in the tax burden for rural Chinese.

Indeed, there is a definite trickle-down due to India's consistent 8%+ growth. There are other factors that have contributed to greater economic equity including employment created by large infrastructure development work undertaken by the government in rural areas.