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Insights on Economic Inequalities

Household Assets and Wealth Quintiles, India 2006–16

The potential of National Family Health Survey wealth index to contribute to the discourse on poverty and inequality in India is presented. Between 2005–06 and 2015–16, there have been improvements in ownership and access to fairly basic household assets and amenities, yet, much needs to be accomplished in the provisioning of pucca houses, clean cooking fuel, improved toilet facilities as well as access to the digital world through computers and the internet. Inter-household inequalities in asset ownership have declined, but there are large intergroup inequalities with particularly disadvantaged asset ownership profiles for Scheduled Caste, Scheduled Tribe and Muslim households. Interstate inequalities in asset ownership, however, have increased. The increased concentration of asset poor is found in Bihar, whereas Punjab and Haryana experience increased share of richest households. Overall, based on robustness checks, the NFHS wealth index is an important proxy of socio-economic status and offers considerable scope for timely and systematic analysis of economic inequalities.

Ever since the seminal contribution by Filmer and Pritchett (2001), the principal component analysis (PCA)-based wealth index has been instrumental in building a robust evidence base on socio-economic inequalities in maternal and child health in India and elsewhere (Gwatkin et al 2000; Rutstein and Johnson 2004). However, at the same time, the intrinsic relevance of the wealth index is seldom explored and hitherto has remained a neglected aspect of policy research. For instance, the rich discourse on poverty and inequality in India is almost exclusively based on household consumption expenditure data, whereas the analytical merits of the household assets is never emphasised. The fact that India is passing through a rather

unprecedented phase of economic growth increases the need and relevance of understanding equity implications using alternative economic indicators.

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Updated On : 26th Jun, 2020

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