The following can be listed as the reasons for inequality in India.
- Historical reasons: Discrimination against certain sections of the society since historic times. This has affected their choice, opportunity, and accessibility to education, employment and health. Though policies like Reservation have been implemented since Independence, they were successful only in the economic and political sphere that too to a limited section of people but failed largely in social upliftment.
- Females were always treated to be subordinate and weaker to males. Girl education is considered to be a burden on the family and women have limited choices in employment.
- Large-scale informal employment: 80% of the Indian labour force is employed in the informal sector. Informal sector jobs are more insecure without regular pay and social security benefits. This increases the wage gap between formal and informal sectors.
- A huge proportion of the population is still dependent on agriculture but the share of agriculture to the total GDP is falling.
- Inter-state inequalities: Growth has been different across sectors and regions. For examples, Green Revolution has disproportionately benefitted Western and Southern India when compared to Eastern India.
- Studies show that globalization and opening up the economy has benefited the rich more than the poor, thus raising the inequality. Global platforms like WTO have resulted in increased trade competitiveness affecting the returns of local investors and producers.
- According to the paper by famous Economist Thomas Piketty, tax progressivity which is a tool to contain the rise in inequality was progressively reduced. Wage inequality dispersion also increased in many sectors, as privatizations removed government-set pay scales, which were less unequal.
- Lack of skill development and jobless growth.