Income Inequality in India: Pre- and Post-Reform Periods

India witnessed a widening of income inequality during the phase of acceleration in economic growth in the post-reform period (1993-94 to 2004-05). This paper analyses the issue by using different types of inequality measurements like general entropy indices, kernel density graphs, percentile of income graphs and field decomposition. It finds two major features of a rising inequality in urban areas: (a) even with a doubling of per capita consumption growth in the post-reform decade, the decline in poverty was less by a quarter compared to the pre-reform decade, and (b) in the post-reform period, the growth of the wage rate of regular workers was negative up to the 50th percentile of wage earnings, and beyond that point, wage rate growth turned positive and rose sharply to reach 5% per annum in highest quintile of wage earnings.