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For the economic growth, making a choice between egalitarianism and inequality has not remained a major concern for long time. However, a global consensus has recently been indeed emerging in favour of equality. The rationale behind it is the acceptance to the reasoning like exacerbating inequalities have consequential implications for the growth and macroeconomic stability of the nations. IMF also referred to the fears like possibility of concentration of political and decision-making power in the hands of a few, sub-optimal use of diversified human resources, misuse of political power and lack of appropriate investment policy due to economic instability and higher fiscal crisis risk (Norris, 2015). Additionally, apprehensions that persistent unbalanced sharing of the growth would lead to social resentment, fuel populist and protectionist sentiments have also been proving true. Recent discussions, particularly in the US, about increased inequality being one possible cause of the 2008 financial crisis also contributed to relevance for policymaking to abridge inequality (Cinago, 2015). Hence, the focus has been shifting towards the equality and inclusive development during the process of policy making regarding economic growth. Even at national and international level, various institutes have made efforts to combat inequality like UNDP has set the target to reduce inequalities and ensure equal opportunities under the Sustainable Development Goals, which have to be achieved by 2030. Going beyond the income factor in terms of inequality, a new idea of human development which embodies human capabilities and aggrandization of choices has broached in the 90s and Human Development Index developed by Mahbub Ul Haq and Amartya Sen holds a significant place. A bi-directional relationship between income and the level of human development has also been emerged in the recent decades. In essence, the existence of income inequalities leads to the deprivation in education, health and other factors affecting human development and other way around.

Numerous studies have documented the relationship between inequality and human development as listed below-

Hicks (1997) asserted that the distributional inequalities in income, education, and longevity possess a major concern for human development and well-being and suggested a mechanism to incorporate inequalities of income, education, and longevity into the framework of the Human Development Index (HDI). The paper recommended that inequality should be reduced on the basis of efficiency argument asserting that lesser inequality of incomes leads to a more efficient societal use of income for obtaining other valuable social goods.

Grimm et. al. (2010) measured the inequality in human development to a sample of 32 developing and industrialized countries and found strong overall negative correlation between the level of human development and inequality in human development. The strength of that relationship varies across the three sub-indices, it is very strong for the GDP component, moderate for the education component and very weak for the life-expectancy component. The paper recommended to focus not only on the country average level of human development but also on its inequality, which in some countries is substantial.

Kovacevic (2010) emphasised the significance of accounting for inequality in opportunities for and outcomes of human development and reviewed the different approaches to accounting for inequality while quantifying Human Development.  It is found that the income Gini index is negatively correlated with the HDI and all of its components at the global level, essentially confirming that the higher inequality in income is associated with lower values of human development measured by the HDI.

Neumayer (2011) analyzed the theoretical and empirical links between inequality in human development and sustainability as inequality in human development is essentially inequality in capability and freedom which will determined by income, education and health. The paper found that the vicious circles between more inequality leading to more unsustainability and vice versa are likely to exist and suggested that the policies aimed at reducing inequality and achieving sustainability have a good chance of resulting in virtuous circles.

Inaki & Smits (2020) developed the Subnational Human Development Index (SHDI) to examine the within-country variation in human development by covering 161 countries. The paper found that within-country inequality in human development and subindices is much less in high-HDI countries and strong in low and middle-developed countries. Education disparities explain most SHDI inequality within low-developed countries, and standard of living differences are most important within the more highly developed ones.

The studies have discussed the dynamics of inequality in terms of human development and the negative impact of inequality which shifted the global agenda towards equality and human development.

Historicity and Reasons

No doubt, visioning complete equality truly is an illusion. Even some economists justified the existence of inequality based on marginal productivity theory resultantly those who would make more contribution in the economy will get more returns. Indeed, some level of inequality is inevitable as some individuals have more capabilities; in return, they get more rewards. Withal, there is a belief that it is necessary to give more incentives to some people as compared to others to make them work and invest more. Nonetheless, the role of redistribution policies in reducing inequality can’t be denied. While on the contrary, the theoretical foundation of equality has supported the notion of distributive justice. Rawls supported the concept of inequality if it ensures distributive justice i.e., existing level of inequality should not make the situation of the worse worst off. While, Amartya Sen broaden the view of justice and rationale of income distribution. He has explicated that it is the lack of certain key capabilities, which eventually creates inequality and poverty. Thus, to achieve the idea of just society, the provision of equal opportunities should be the main agenda.

Numerous are the reasons for economic inequality amongst the nations but basically it is a result of unequal progress. While having a look at the other reasons, historically, it comes out to be the rise of private property during the beginning of industrialised phase which made bifurcation of the society between rich and poor class. In fact, Rousseau stated that a departure from the primitive state would ultimately lead to the pre-dominance of the private property, from where all sorts of the inequalities will generate (Charles-Coll, 2011). The issue of income re-distribution became a key question then. In the end of the Nineteenth century, the rate of exploitation increased and the gap between the two classes widened. Inherently, it is the result of neglect of welfare led economic growth policies. If we look two centuries back, the world inequality worsened continuously from 1820 to 1950 as the Gini coefficient rose by 1 percentage point every decade, then almost levelled off between 1950 and 1992 (Bourguignon & Morrisson, 2002). The 1950s era traced a welfare regime aimed at alleviating inequality occurring out of a capitalistic and industrialist society but after 90s the conception of welfare encountered various transitions (Anderson, 2007). After 90s, the international policy favoured the emergence of globalisation and privatisation which has been accompanied by growing inequality.

During the last two-three decades, some regions have seen perceptible development whilst others are gradually moving towards that path. The main factors that acted as a dis-equalising force throughout the 19th and 20th century was relatively slow growth of the Asian region and rapid enrichment of the European population. Howbeit, now the world has becoming more equal as many developing countries are converging towards the level of income of developed countries. With the initiation of Twenty First Century, the share of global wealth in the high-income countries from 2000-2014 fell 80 percent to 71 percent, while the share of middle-income countries such as China and India rose from 14 to 22 percent. While reviewing the scenario within the countries, the trends and level of income inequalities within the countries turned out to be more grievous till now. It is found that the egalitarian regime started with the Great October Revolution 1917 in Russia which attracted the world. Also, in almost all the rich countries, a sharp decline in the income inequality between 1914-1945 perceived as a consequence of the destruction led by the two world wars (Piketty, 2014).  Thereafter, controlled capitalism in developed countries like US and Western Europe and rise of communist powers like Russia and China stabilised the income distribution during 1950-1980. In the last few decades, the level of income inequality has been spiked in almost all the countries. Since 1980s, it has escalated in USA, China, India and Russia whereas Europe has seen a modest increase (World Inequality Report, 2018). Accentuating inequality in income is a sign of the closure of post war egalitarian era which raised the power of elite groups and policies were shaped in favour of them. World Social Report (2020) revealed that income inequality has increased in most developed countries and in some middle-income countries, including China and India. Countries where inequality has grown are home to more than two thirds (71 per cent) of the world population. The top 10 per cent of the population of southern countries (except China) acquired one-half or more of the national output (Patel, 1991). The share of national income of the top 0.1 per cent in America (that merely constitutes 1600 families) rose from 1 per cent in 1980 to 5 per cent in 2012; the share is even bigger than the Glided Age (Stiglitz, 2013). Whereas, the people in the middle and at bottom have not fared so well. Southeast Asian countries have shown income distribution adverse than South Asia but better than Africa and Latin America. More spending on poverty alleviation programmes and food subsidies brought more egalitarian income distribution in South Asia (Hashim, 1998). Technological progress during this period has augmented inequalities. Fiscal expert Israel Sawtrill stated that the globalisation and technology created bigger wage premium for the top and stagnating wages for the bottom employees (Mokkapati, 2018). The dramatic rise in inequalities in Anglo-Saxon world has also owned to the superior wages earned by the CEOs of various firms. Living conditions differ widely between and within the different regions of the world. Very few are living their life in a healthy and wealthy manner whilst the majority lead a vulnerable life. The fruits of widespread development in the various countries of the world could not reach equally to the people, thus instead of filling the gap between rich and poor, the inequalities have grown. The ramification of rising disparities and a lack of opportunities are creating a vicious cycle of inequality, frustration and discontent among the people.

Income Inequality vs Human Development

The growing inequality could jeopardize the achievement of internationally agreed Sustainable Development Goals. UNDP set a target of eliminating poverty and reducing inequalities in the SDGs to improve the living conditions of impoverished people. The new development paradigm strides towards bridging the income gap and human development. The variations in income inequality and human development are measured through Gini coefficient while, Human Development Index (HDI) and Inequality Adjusted Human Development Index (IHDI) measures the main dimensions of human development i.e., health, education and income as well as the extent of inequalities. More clearly, the IHDI combines a country’s average achievements in health, education and income with how those achievements are distributed among country’s population by “discounting” each dimension’s average value according to its level of inequality. As these indicators are highly correlated, table no. 1 unveils the position of selected countries from various categories of human development and their profile with respect to per capita income and poverty ratio taken for the analysis of income inequality. 

High Income Countries (North American and European Continents)	Sweden	UK	USA
	43998	35835	55435
Very High Human Development	0.947	0.929	0.921
Upper Middle-Income Countries (Asian and South-American Continents)	China	Brazil	Sri Lanka
	8394	7692	3466
High Human Development	0.768	0.754	0.782
Lower Middle-Income Countries (Asian Continent)	India	Bangladesh	Pakistan
	1822	1777	1186
Medium Human Development	0.633	0.661	0.544
Low Income Countries (African Continent)	Nigeria	Ethiopia	Uganda
	1779	744	669
Low Human Development	0.535	0.498	0.525

Source- 1. UNDP Database (2020), http://hdr.undp.org/en/content/download-data 2. CIA World Factbook, https://www.cia.gov/the-world-factbook/

From the first category, three countries i.e., Sweden, US and UK with high income and very high human development are selected. These are first world countries or developed countries having high economic growth, better opportunities and developed social security system.  In the category of upper middle-income countries, the selected ones are China, Brazil and Sri Lanka with favourable economic conditions but are still emerging. India, Bangladesh and Pakistan fall in the category of medium Human development and lower middle income. The countries in fourth category are suffering from widespread poverty and overpopulation which eventually resulted in low levels of human development and slow economic growth. So, the measures mentioned hereafter intend to investigate the well-being and prosperity among the people in these countries.

The table no. 2 depicts the Human Development Index and Inequality-adjusted Human Development Index of the selected countries. It also shows the gap between Human Development Index (HDI) and Inequality Adjusted Human Development Index (IHDI) of these selected countries & overall loss in HDI due to inequality. The percentage difference between the value of IHDI and HDI depicts the overall loss to human development due to inequality. All the countries have significantly ameliorated their performance in terms of HDI over a span of ten years. The countries with very high level of human development have HDI of the value of more than 0.8. It is quite apparent that human development is remarkable in the developed economies because of high level of income, living standards and skilled manpower. Sweden is the outstanding country with the highest value of HDI among the selected countries. India with HDI value 0.64 falls in the medium human development category and the value increased from 0.57 to 0.66 during 2010-2021. The performance with respect to HDI indicated a bleak picture in case of African countries i.e., Uganda, Nigeria and Ethiopia. High incidence of poverty, corruption, lack of basic infrastructure, unemployment and political instability can be held responsible (Kutor,2014). However, the interesting fact is that Ethiopia, a worst performer has seen the largest jump in the HDI value among the selected countries during these ten years.  

Table no.2: HDI and IHDI of selected countries

Countries	HDI		IHDI		Overall loss in HDI (in per cent)		Difference between HDI and IHDI
	2010	2021	2010	2021	2010	2021	2010	2021
Sweden	0.911	0.947	0.849	0.885	6.8	6.5	0.062	0.062
United Kingdom	0.912	0.929	0.824	0.850	9.6	8.5	0.088	0.079
United States	0.916	0.921	0.812	0.819	11.4	11.1	0.104	0.102
Sri Lanka	0.754	0.782	0.625	0.676	17.1	13.6	0.129	0.106
Brazil	0.727	0.768	0.529	0.651	27.2	15.2	0.198	0.117
China	0.699	0.754	0.538	0.576	23	23.6	0.161	0.178
India	0.579	0.661	0.407	0.503	29.7	23.9	0.172	0.158
Bangladesh	0.557	0.633	0.393	0.475	29.4	25.0	0.164	0.158
Pakistan	0.512	0.544	0.351	0.380	31.4	30.1	0.161	0.164
Uganda	0.498	0.535	0.338	0.341	32.1	36.3	0.160	0.194
Nigeria	0.482	0.525	0.281	0.396	41.7	24.6	0.201	0.129
Ethiopia	0.421	0.498	0.277	0.363	34.2	27.1	0.144	0.135

Source- UNDP Database (2020), http://hdr.undp.org/en/content/download-data

Nonetheless, if we look at the Inequality-adjusted Human Development Index in the table no.2, every country has experienced a loss in the value of HDI after the consideration of inequality. So, it is evident from the aforementioned values that there is decline in the values of indicators of HDI due to the prevalence of unequal distribution. Sweden and UK with very high level of human development have moderate losses. The overall loss of human development in terms of inequality is the highest in Nigeria followed by Ethiopia, Uganda, India and Brazil. The gap between HDI and IHDI values is high in Brazil, Nigeria, Pakistan and India. As compared to neighbouring countries, India has glimpsed more difference between the HDI and IHDI. Again, African countries have lesser value of IHDI because of the higher incidence of poverty and massive wage gaps.

To further explore the extent of income inequality, the relationship of income inequality with HDI growth rate is investigated by taking Gini coefficient of these selected countries. Gini measures how equitably a resource is distributed in a

population and it ranges between zero and one (Farris, 2010). Gini coefficient of zero shows perfect equality whereas one shows perfect inequality. HDI growth rate shows variations in HDI during last ten years. The bar in the figure one shows upward trend of HDI growth rate from US to Ethiopia. The HDI value of US and UK is already high which results in the less growth of HDI. Figure 1 also reveals that Brazil lies at the top of the graph showing the highest level of income inequality during 2010-2019. High rate of unemployment, increasing income gap between skilled workers and unskilled workers, small number of large landowners in the rural areas and urban segregation makes the distribution precarious (Skidmore, 2004; Beghin, 2008). The larger share of growth acquired by capitalists in India made Gini coefficient stood at 37.8 in this time-period. Sweden has the lowest Gini coefficient; while, US has the highest Gini among the developed nations because of the rollback of taxes at the top and reduction in social programs after Reagan revolution (Stiglitz, 2013).

Equality vs Exclusion

The growing level of inequality is changing the dynamics of the society in terms of exclusion. The divergence in the level of income inequality is clearly visible in the table no. 3 showing the income share of top 10 per cent and poorest 40 per cent. Those at the top continued to accumulate an extensive share of income and have complete control over the country’s irrespective economy and politics. The rise in the share of top 10 per cent incomes has taken place at different pace across countries since 1980s. Despite of the fact that Brazil has been enjoying the status of high human development and having upper middle income with only 4.2 per cent people living below poverty line, but it has an enormous and persistent level of income inequality during the last few decades. The top 10 per cent owned more than the half of the income. Large concentration of profits and capital incomes has expanded the gap between rich and poor in the country. Also, Brazil has suffered a strong recession during 2014-16. India followed by Brazil has also seen an upsurge with top 10 per cent owning 31.5 per cent share of income in 1980 to 56.13 per cent in 2019. The hike in India is unendurable. De-regulation and liberalisation policies lead India towards the egregious level of inequalities. The number of billionaires has been increased from 9 in 2000 to 119 in 2019 in India (Oxfam Inequality Report,2019).  On the other hand, the bottom 40 per cent have been suffering in the wake of emerging affluent society.

Table no.2: Share of top 10 per cent and Bottom 40 per cent in the income distribution.

Countries	Top 10 per cent			Bottom 40 per cent
	2000	2010	2019	2000	2010	2019
Sweden	23.9	24.2	21.9	16.6	14.6	15.6
United Kingdom	35.1	34.98	35.19	20.17	20.55	21.51
United States	42.64	43.69	45.35	15.07	13.85	13.52
Sri Lanka	49.49	47.05	49.08	14.95	16.89	15.92
Brazil	54.87	56.62	57.33	11.16	11.04	10.29
China	35.56	42.6	41.42	18.07	14.28	14.84
India	39.87	52.17	56.13	19.3	17.8	16.97
Bangladesh	43.34	41.95	41.71	18.63	19.79	19.71
Pakistan	43.29	40.98	44.57	19.34	20.93	19.16
Uganda	53.7	52.75	51.48	12.79	13.11	13.12
Nigeria	45.99	48.5	42.12	13.7	13.45	16.68
Ethiopia	41.72	43.96	44.86	19.3	17.8	16.97

Source- WID (2020), https://wid.world/

The top 10 per cent are getting five times more than bottom 40 per cent in Brazil and three times more in UK, India and Uganda. The share of top 10 per cent in Sri Lanka, Bangladesh and Pakistan has remained stable.  The inequality levels have also been illustrated in terms of income quintile ratio in the figure 2 and these fluctuated around 5 per cent to 18 per cent in the selected countries during 2000-2017.  It shows immense levels of disparities between top 20 per cent and bottom 20 per cent of the populace in Brazil, US and Nigeria. The same figure also exhibits the percentage of people living below poverty line based on PPP $1.90 per day. Global poverty rate has been reduced during the last three decades and 1 billion people escaped poverty but still one-tenth of the global population lives below poverty line (Mahembe & Odhiambo, 2018). The regions with highest poverty rate are Nigeria because of low income and low level of human development. The other regions where prevalence of poverty is high are Ethiopia, Pakistan, Bangladesh and India. So, it can be concluded that human development is high in the countries where degree of inequality and poverty is low and vice-versa with Brazil an exception.

Governance and public policies play bigger role in the evolvement of human development, poverty and inequality. Most of the public policies protect the interest of elites and public funds are more vested towards the interests of rich than the necessities like health and education. Taxation and spending policies are not more progressive. Only few countries are following the policies that reinforce the process of the eradication of poverty and more inclusive growth vigorously. Public policies can profoundly affect the level of economic structure of the economies in terms of income and human development. The countries enjoying the status of high income and very high human development have better education system and implemented various social security schemes to strengthen the system. Sweden where HDI is already very high, government introduced a long-term reform programme in 2016 to reduce segregation till 2025 which basically emphasise on housing, schooling, societal services and employment opportunities (Govt. of Sweden, 2016). Other than that, more equal access to education, increasing quality of compulsory education, progressive taxation and social security schemes made Sweden more egalitarian society. Even US was more egalitarian before 1970s because of increased access to higher education supported by GI Bill. But after Reagan Revolution, the market incomes started splitting up and government cut down the taxes at the top which led to increase in the share of income at the top. But still, it has lower level of inequalities than the other countries having low level of income and human development. While talking about Brazil, the government follows regressive taxation policy that spares large capital and put more burden on consumption and labour (Beghin,2008). The poor countries having low per capita income like Nigeria, Uganda and Ethiopia lack adequate revenue resources to build human capital and infrastructure to lift people out of poverty. India also lacks well-funded public health and education system. Indian government barely spends approximately 4 per cent of GDP on education and 1.5 per cent on health services. Whereas the government of China initiated various reforms to combat inequality like personal income tax reform, annual hikes in minimum wages and the Dibao system that provides relief assistance for extreme poverty (Chandra et. al 2018). Hence, the lack of pro-welfare public policies creates a predicament for the economically deprived groups in these countries.

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