National Institute of Technology Goa

Department of Electronics and Communication Engineering

Master of Technology VLSI

A Research report On
“ Wealth Distribution And Availability Of
Resources ”

Submitted by
Aswanth G 19ECE2003
B Aswin Kumar 19ECE2004
Danthamala Nikhil 19ECE2005

VLSI 1st Year

Contents

1 4
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2.1 GDP: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2.2 Ginni Index: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2.3 Multidimensional Poverty Index (MPI): . . . . . . . . . . . . . . . . . 6
1.3 SCARCITY OF INDIA’S RESOURCES . . . . . . . . . . . . . . . . . . . . . 7

2 8
2.1 Observation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1
List of Figures

1.1 Indian GDP from 2010-2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.2 Ginni Index of India from 2005-2012. . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Percentage of MPI Poor People by District in India 2015/16. . . . . . . . . . . 6

2
 Abstract

India is an over populated country. In 2015 its current population is 1.28 billion. The re-
sources of India are insufficient to fulfill the needs and wants of the citizens of India. This
paper discuss about the unequal distribution of income and wealth between the rich and poor
people in India. India is shining for only selected few. The impressive economic growth of our
country has bought smile on the face of the rich and powerful even as the rest suffer in distress
and drudgery. “In India, the distribution of assets is extremely unequal, with the top 5% of
the households processing 38% of the total assets and bottom 60% of household owing a mere
13%”, according to the human development report released by planning commission. In the
year 2011-12 in India almost 21.92% of people are laying below poverty line. In this paper,
Gini Coefficient is taken as a indicator of inequality between rich and poor. If the value of Gini
Coefficient is higher, the income gap is also higher. It is shown in this paper that the value of
Gini Coefficient is increased day by day. The income distribution in rural and urban areas and
also taken as the measure of inequality between rich and poor. Scarcity of water, changes in
climatic condition due to global warming causes food insecurity in a over populated country
like India. Ultimately this food insecurity lead to the increase in price level i.e. inflation. This
paper is also discussed about the scarce resources in relation to our needs.
Keywords: Gini Coefficient, Poverty line, and Scarcity.

3
Chapter 1

1.1 Introduction
In the present economic scenario in India high growth of population lead to a serious prob-
lem of availability of necessary resources. The resources of India are scarce to fulfill the needs
of over populated country. The income gap between the rich and poor will increase day by
day. So in present socio-economic scenario poverty is a serious problem in India. Therefore, to
overcome from this kind of serious problem, it is necessary to study the problem and take some
measure. Present paper does the same task. It first identify the problem of poverty and income
distribution in India then suggest some steps for improving the economic condition in India.

Objective of the Study:

• To identify the income inequality in rural urban areas and also within rural urban area.

• To identify the gap between the rich and poor in respect of income and wealth distribution
with the help of Gini Coefficient.

• To identify the scarcity of resources to fulfill the needs and wants of the citizens of the
over populated country like India.

• To identify the GDP growth rate in India during the last few decades.

A significant proportion of an economy’s higher incomes will derive from investment rather
than earnings. It is often the case that the higher the income, the higher the investment-derived
portion tends to be. Because most fortunes require long periods to accumulate, the existence
of a class of very wealthy persons can result from the ability of those persons to retain their
fortunes and pass them on to descendants. Earned incomes are influenced by a different kind
of inheritance. Access to well-paid jobs and social status is largely the product of education
and opportunity. Typically, therefore, well-educated children of wealthier parents tend to retain
their parents’ status and earning power. A dynamic economy, however, increases the likelihood
of attaining wealth and status through individual effort alone.

Wealth is an accumulated store of possessions and financial claims. It may be given a mon-
etary value if prices can be determined for each of the possessions; this process can be difficult
when the possessions are such that they are not likely to be offered for sale. Income is a net
total of the flow of payments received in a given time period. Some countries collect statistics
on wealth from legally required evaluations of the estates of deceased persons, which may or
may not be indicative of what is possessed by the living.

4
1.2 Discussion
1.2.1 GDP:
Gross Domestic Product (GDP) is the broadest quantitative measure of a nation’s total eco-
nomic activity. More specifically, GDP represents the monetary value of all goods and services
produced within a nation’s geographic borders over a specified period of time. Higher the value
of GDP higher will be the growth rate. The Gross Domestic Product (GDP) in India was worth
2066.90 billion US dollars in 2014. The GDP value of India represents 3.33 percent of the
world economy. GDP in India averaged 550.27 USD Billion from 1970 until 2014, reaching an
all time high of 2066.90 USD Billion in 2014 and a record low of 63.50 USD Billion in 1970.
The World Bank Group reports GDP in India.

Figure 1.1: Indian GDP from 2010-2020.

1.2.2 Ginni Index:

Gini index measures the extent to which the distribution of income (or in some case con-
sumption expenditure) among individuals or households within an economy deviates from a
perfectly equal distribution. A Lorenz curve plots the cumulative percentages of total income
received against the cumulative number of recipients, starting with the poorest individual and
household.

5
 Figure 1.2: Ginni Index of India from 2005-2012.

1.2.3 Multidimensional Poverty Index (MPI):

Human Development Report (HDR) 2010, measures poverty in terms of a new parameter
namely “Multi dimensional Poverty Index (MPI) which has replaced the human poverty index
(HPI) since 1997. The multidimensional poverty index (MPI) indicates the share of the popula-
tion that is multi dimensionally poor adjusted by the intensity of deprivation in terms of living
standards, health and education. This MPI attempts to capture more than just income poverty
at the household level.

Figure 1.3: Percentage of MPI Poor People by District in India 2015/16.

6
1.3 SCARCITY OF INDIA’S RESOURCES
Since Indias independence, the mammoth task of feeding its hundreds of millions, most of
whom are extremely poor, has been a major challenge to policymakers. In the coming decades,
the issue of food insecurity is likely to affect almost all Indians. However, for the poorest
amongst us, it could be catastrophic. India ranks 65 of 79 countries in the Global Hunger
Index. This is extremely alarming. In the past few years, uneven weather patterns combined
with over exploited and depleting water resources in various parts of India have wreaked havoc
on food security, particularly for small and marginal farmers, as well as the rural poor.

The recently launched Global Food Security Index (GFSI) estimates that in 2012, there are
224 million Indians, around 19% of the total population, who are undernourished. The same
report also estimates that while the Indian government has various institutions designed to deal
with the impact of inflation on food prices, it only spends 1% of agricultural GDP on research
to build food security for the poorest. Overall, India ranked 66th on the GFSI.

Indias total water availability per capita is expected to decline to 1,240 cubic meters per
person per year by 2030, perilously close to the 1,000 cubic meter benchmark set by the World
Bank as water scarce. Factors such as increasing usage, poor infrastructure, and pollution have
led to a decline of water quantity and quality in India.

Climate change, meanwhile, is expected to cause a two-fold impact. One, increasing tem-
peratures have hastened the rate of melt of the Himalayan glaciers; upon which major Indian
rivers like the Ganges, Indus and Brahmaputra depend. Second, the effect of climate change on
monsoons in India will cause them to become more erratic, arriving earlier or later and lasting
for shorter, more intense periods of time. Indias farming communities depend overwhelmingly
on the monsoon, as their cropping patterns are built around it.

Meanwhile, farmers in states in West and South India, where rivers are seasonal, have to
depend heavily on rapidly depleting groundwater resources.

7
Chapter 2

2.1 Observation
During the study period Indias GDP was grow at a faster rate but Gini Index shows an
increasing trend which mea ns the rise in growth rate is limited to few. High Gini Index means
rise in income inequality. There is a disparity in income distribution between rural and urban
areas. During the study period the increase in income in the rural area is much lesser than urban
area. Consumption by the poor is growing at less than half the rate at which the economy is
growing in this period. According to the Multi-dimensional Poverty Index (MPI) 55resources
is also a serious problem to fulfill the needs and wants of the citizens of India. It leads to a
shortage in supply in relation to demand, which increase the price level. So the poor people are
not able to fulfill their basic needs. Therefore these problems create an alarming situation in
the country. Government and NGOs should take some steps to overcome this kind of serious
problem.

2.2 Conclusion
• Since growth rate is high in the study period but that growth will not reach to every
section of the population that is why the income inequality grows up which is shown by
the gini coefficient. So for the equal distribution of resources government should increase
the direct tax for the higher income group.

• Government should have to collect more taxes from higher income group and when the
government income will increase that should be distributed to the poor in the form of
subsidy.

• Another problem is scarcity of our resources. So the misuse of resources should min-
imize by proper distribution of it. So black marketing of any item should stop by the
government by giving heavy punishment to the black marketers.

• During the study period consumption by the poor is growing at less than half the rate
at which the economy is growing. There is a disparity between the rural and urban
income. Growth of rural income is much lesser than the growth of urban income. In India
rural population is higher than urban population. Rural people are mostly dependent on
agriculture. But in most of the cases agriculture is dependent on weather condition. So
development of technology for agriculture is very much necessary to improve the income
growth in rural area.

8
2.3 References

1. Ades, Alberto, and Thierry Verdier. 1996. “The Rise and Fall of Elites: Economic
Development and Social Polarization in Rent-Seeking Societies.” Discussion Paper 1495.
Center for Economic and Policy Research, Washington, D.C.

2. Aghion, Philippe and Patrick Bolton, 1997, ”A Theory of Trickle-Down Growth and
Development”, Review of Economic Studies, 64: 151-172

3. Ahluwalia, Montek. 1976. “Inequality, Poverty and Development,” Journal of Develop-

ment Economics, vol. 6, 307- 342.

4. Ahluwalia, Montek, N.G. Carter and Hollis Chenery. 1976. “Growth and Poverty in
Developing Countries,” Journal of Development Economics, vol. 6, 299-341.

5. Alesina, Alberto and Roberto Perotti, 1996, ”Income Distribution, Political Instability,
and Investment”, European Economic Review, 40(6): 1203-1228

6. Alesina, Alberto and Dani Rodrik. 1994. “Distributive politics and economic growth.”
Quarterly Journal of Economics. 109(2). p. 465-490.

7. Atkinson, Anthony B. and Andrea Brandolini, 2001, Promises and Pitfalls in the use of
Secondary Data-Sets: Income Inequality in OECD countries as a Case Study, Journal of
Economic Literature, 39(30, pp 771-799, September.

8. Banerjee, A.V. and A.F. Newman, 1993, ”Occupational Choice and the Process of De-
velopment”, Journal of Political Economy, 101(2): 274-298.

9
2.4 Glossary
• Lorenz Curve: The Lorenz curve is a graphical representation of income inequality or
wealth inequality developed by American economist Max Lorenz in 1905.
• World Bank Group (WBG):The World Bank Group (WBG) is a family of five interna-
tional organizations that make leveraged loans to developing countries. It is the largest
and most well-known development bank in the world and is an observer at the United
Nations Development Group.
• Human Development Report:The Human Development Report (HDR) is an annual
report published by the Human Development Report Office of the United Nations Devel-
opment Programme (UNDP).
• Standard of Living:An individual’s or a socioeconomic class’s standard of living is the
level of wealth, comfort, material goods, and necessities available to them in a certain
geographical area, usually a country.
• Global Food Security Index:The Global Food Security Index consists of a set of in-
dices from 113 countries. It measures food security across most of the countries of the
world.[1] It was first published in 2012, and is managed and updated annually by The
Economist’s intelligence unit.

2.5 Appendix
World Bank. (2008). Russian Economic Report 16.

World Bank. (2011). The Changing Wealth of Nations: Measuring Sustainable Development
in the New Millennium. The World Bank. Washington, DC.

Worldwide Fund for Nature (WWF), (2006). Payment for Environmental Services: An Eq-
uitable Approach for Reducing Poverty and Conserving Nature. Wunder, S. (2005). Payments
for Environmental Services: Some Nuts and Bolts. CIFOR Occasional Paper No. 42. Jakarta:
Centre for International Forestry Research.

UN (2008), Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World,

International Institute for Sustainable Development (2005). Aiding, Trading, or Abetting:

Managing Revenues from Natural Resources and Aid.

OECD (2011a), Towards Green Growth, OECD Publishing, Paris.

United Nations Development Programme (UNDP). (2005). Central Asia Human Develop-
ment Report.

OECD (2011c), Tools for Delivering on Green Growth, OECD Publishing, Paris.

OECD (2011a), Towards Green Growth, OECD Publishing, Paris.

10