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‘Reform labour laws to bridge urban-rural divide’

Increasing urbanisation levels are fuelling income disparity, notes a recently-released report.

Written by Suneetiahuja | New Delhi |
February 10, 2008 10:56:43 pm

Increasing urbanisation levels are fuelling income disparity, notes a recently-released report. If high-income level groups are enjoying a 60 per cent savings rate after meeting routine and non-routine expenditure, the lowest strata with no surplus income to save or invest after meeting basic requirement remains vulnerable, shows a India Financial Protection Survey.

Despite the fact that nearly 80 per cent of Indians save, one in every four Indian families is financially vulnerable. This means, income of nearly 25 per cent of the country’s households is below their total expenditure. Approximately three-fourth of such households are in villages.

“The poor are not poor only because of the low income,” said Suman K Bery, director general NCAER, the think tank that undertook the survey on behalf of insurance firm Max New York Life. “Poor people face shocks like natural calamity and health care.”

On an average, people belonging to the lowest group, comprising 17.9 per cent households, have an annual per capita income of Rs 3,534 and contribute 5.4 per cent to India’s total income. In contrast, the highest income group accounts for 22.3 per cent of households, but contribute almost 51 per cent .

Rajiv Kumar, director, ICRIER, said, “To lessen the widening rift, we should strengthen agriculture, reform labour laws and education.”

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