Addressing Inequality in South Asia

Inequality in South Asia appears to be moderate when looking at standard indicators such as the Gini index, which are based on consumption expenditures per capita. But other pieces of evidence reveal enormous gaps, from extravagant wealth at one end to lack of access to the most basic services at the other. Which prompts the question: How bad is inequality in South Asia? And why would that matter?

This book takes a comprehensive look at the extent, nature, and drivers of inequality in this very dynamic region of the world. It discusses how some dimensions of inequality, such as high returns to investments in human capital, contribute to economic growth while others, such as high payoffs to rent-seeking or broken aspirations, undermine it. Drawing upon a variety of data sources, it disentangles the contribution that opportunity in young age, mobility in adult years, and support throughout life make to inequality at any point in time. Equally important, the book sheds light on the prospects of escaping disadvantage over time.

The analysis shows that South Asia performs poorly in terms of opportunity. Access to basic services is partial at best, and can be traced to characteristics at birth, including gender, location, and caste. Conversely, the region has had a robust performance in terms of geographical and occupational mobility despite its cluttered urbanization and widespread informality. Migration and jobs have served disadvantaged groups better than the rest, highlighting the importance of the urbanization and private sector development agendas. Support falls somewhere in between. Poverty alleviation programs are pervasive. But the mobilization of public resources is limited and much of it is wasted in regressive subsidies, while inter-government transfers do not do enough to mitigate spatial inequalities.