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Nopoor Policy Brief Nr. 17: An Analysis of Earnings Inequality of Paid Workers in Rural India from 2004/05 to 2011/12

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Agriculture in India employs the largest share of the Indian workforce. However, its contribution to Gross Value Added (GVA) is much smaller. In 2011, the employment shares of agriculture, industry, and services were 49, 24 and 27 percent respectively, whereas their shares in GVA were 19, 33, and 48 percent respectively. In addition, between 2004/05 and 2011/12, real Gross Domestic Product (GDP) in these sectors grew at 4.2, 8.5 and 9.6 percent per annum, respectively, making agriculture the slowest growing sector of the economy. Given these figures, the concern about whether high overall GDP growth has benefitted those at the bottom, and to what extent they have benefitted compared to those at the top, is extremely pertinent for rural India. As recent events in many industrialized countries show, periods of economic growth that do not lead to gains in living standards for all segments of the population might lead to growing dissatisfaction among citizens and thus, might jeopardize social cohesion. To inform discussions on these issues, Nopoor focused on rural India and examine how real earnings of paid workers (wage earners) evolved over the seven-year period between 2004/05 and 2011/12.

Image: ©IRD - Visan, Delia