This is what is most worrisome about India. The rich is getting richer and the middle class is improving but the poor on the whole has not moved a bit. With the rate the population grows the poor probably regressed. Its a shame because the outsourcing party is not going to last forever.
How did you arrive at that from the op? India's gini index has been quite stable[1]. India only makes about 50 billion or so a year in revenue from outsourcing[2].
First, not just other developing countries like Russia, Brazil and China but even US has more inequality than India. [1]
Second, Indian outsourcing industry is over-hyped. It contributes just 5% to the Indian GDP. But India is silently making big progresses in other industries. How many people here know that India is now the world's biggest manufacturer of small cars, overtaking Japan? [2]
Those statistics are a little misleading.
In a country where, despite having a few billionaires, by and large everyone is fairly poor - these stats will not show inequality. Because most people in India are equally poor.
The second example you give is, in fact, an example of outsourcing, as 50% of the cars are generated by American, Japanese and Chinese companies operating in India, with the other 50% being Maruti, which is also partially Japanese owned.
For India to succeed beyond the hype, it's going to take more than gradual increases in GDP. It will require a cultural revolution. That hasn't happened yet.
Are you saying Gini co-efficient doesn't show inequality? How? We're not talking about poverty here, just 'inequality'.
"The second example you give is, in fact, an example of outsourcing"
That's not outsourcing but offshoring and how is it a bad thing? Don't you think talking about indigenousness in today's globalised world is nothing but jingoism?
"...cultural revolution..."
A country's culture and economy are tightly linked. It's a chicken-egg situation. Don't know about Indian culture but Indian economy is certainly doing good.
> Are you saying Gini co-efficient doesn't show inequality?
Let's take the parent's example. Say we have a country with 300 million people making $100 each per year (all exactly equal) and 20 people making $1 billion each per year (also all exactly equal).
The total income is $50 billion per year. The Lorenz curve looks like a straight line from (0%, 0%) to (100%, 60%) (because the area under those 2 people making $1 billion is zero for our purposes. That means the area under the Lorenz curve is 0.3, the area _over_ the Lorenz curve is 0.2, and the Gini coefficient is 0.4.
That's lower than the Gini coefficient for the US.
Which was the poster's point: if you have a very small rich elite and a vast pretty poor populace whose _total_ income is comparable to the total income of the elite due to the sheer numbers of the poor, then inequality measures like the Gini coefficient will be very strongly affected by the inequality within the poor part of the population. And if inequality there is low, overall inequality as measured by the Gini coefficient can end up looking pretty low in spite of the existence of the rich elite.
Note that if in the above example the 300 million people each made $1000/year, not $100, then the Gini coefficient would be very low... in spite of those 20 really rich guys.
Now maybe you don't think this situation has much inequality, but that's a separate issue. The claim was simply that in this situation inequality measures like the Gini coefficient will show low inequality.
