In India, although there are claims that inequality has decreased in the post-liberalization period, careful
analysis of data shows that these views are mostly unsubstantiated.Comparable estimates of the 50th (1993-
1994) and 55th (1999-2000) rounds of National Sample Survey data reveal that inequality increased both in
rural and urban India. Several authors have also pointed outthat though the richer sections of the population
benefi ted in the post-liberalization period, there has been a stagnation of incomes for the majority, with
the bottom rung of the populationseverely negatively aff ected by this process. Th ere is also evidence that,
both at the national and the state levels, income disparities between the rural and urban sectors increased
during this period.State-level data also showed that not only had the income gap between the poorest and
the richest states increased during the 1990s, but urban inequality increased for all the 15 major states inIndia. Inequality also alarmingly increased in the North-Eastern part of the country, where all the states
experienced increased rural and urban poverty during this same period.
One of the reasonsbehind the increased income inequality observed in India in the post-reform period
has been the stagnation of employment generation in both rural and urban areas across the states. Open
unemploymentincreased in most parts of the country, and the rate of growth of rural employment hit an
all time low. Declining employment elasticity in several sectors, including agriculture, was one of the mainreasons behind this decline. Low employment generation in the agriculture sector has also been associated
with a steady, but signifi cant increase in casualization of the labour force in India. Due tolarge scale downsizing
and privatization of public sector units, employment generation in the organized sector also suff ered.
However, the services sector performed relatively better during this...