Piketty problem for growth.

"Thomas Piketty has thrown a flaming dart into the Indian economic debate," wrote an editorial in the Mint. "In a new paper written in collaboration with Lucas Chancel, the superstar French economist has shown that income inequality in India is now at its highest level since income tax was first levied in 1922." "The two economists show that income inequality has been rising steadily since Rajiv Gandhi became Prime Minister" and according to the International Monetary Fund the Gini coefficient rose from 45 in 1990 to 51 in 2013. The rise in inequality coincided with a rise in the growth of the economy and the middle 40% of India got 23% increase in national income since 1980, compared to 43% in China. The reason why income of the middle 40% in China increased 20% more than in India was because of the boom in manufacturing, while in India the growth has been mainly in the services sector, which constituted 61% of our GDP in 2014-15. Piketty's calculations may not be entirely correct, wrote T Kundu, because he may have underestimated earnings of the lower 90% and overestimated earnings of the upper 10%. Household surveys do not suggest a sharp increase in inequality in India but our Gini coefficient is worse than most of our peers. "Anand and Thampi show that the shares of scheduled castes (SCs), scheduled tribes (STs) and other backward classes (OBCs) in national wealth are not only lower relative to their population shares, but have also deteriorated since 1991." Why, when over 50% of seats in higher education and in government jobs have been reserved for these groups since independence? Surely, this gives enormous opportunities for upward mobility to such castes. "Of the total income growth between 1951 and 1980, the bottom 50% of the population captured 28%, the 'middle 40%' got 49%, while the top 10% had to remain satisfied with appropriating 24% of the growth.," Wrote M Chakravarty. "During 1980-2014, the bottom half of the population got a mere 11% of the growth, the middle 40% captured 23% and the top 10% of people captured two-thirds of growth." Does it mean that growth by any means does not reduce poverty, or does it mean that socialism creates so little wealth that everyone becomes equally poor? The answer is probably politically incorrect. Such inequality has hazards, wrote J Crabtree. The IMF has shown that "unequal nations tend to grow more slowly and are more prone to financial instability". While the rest of the world is beginning to grow and commodity prices are still low, growth in our economy is slowing down. Maybe that will decrease inequality.