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The acceleration of growth in the post-liberalisation era has been accompanied by a rise in inequality, as measured by the Gini coefficient. At the all-India level, inequality, which had remained stagnant in the pre-liberalisation era, rose in the post-reforms era - from 0.32 in 1993-94 to 0.36 in 2004-05. This rise in inequality implies that benefits from high growth have not been felt evenly across the entire population, with a greater proportion accruing to the rich.
Data from the National Sample Survey Office consumption expenditure surveys, which form the basis of both poverty and inequality estimation in India, point towards divergent trends in rural and urban areas. While in rural areas inequality rose from 0.28 in 1993-94 to 0.30 in 2004-05 and subsequently declined, in urban areas, it has shown a secular rise from 0.34 in 1993-94 to 0.38 in 2009-10.
Interestingly, as shown by economist Arvind Subramanian, richer states are on an average associated with higher levels of inequality, while low-income states such as Madhya Pradesh and Bihar exhibit lower levels. Surprisingly, Kerala, which does remarkably better than most states on social development indicators, has much higher levels of inequality.
