Published On: Wed, May 4th, 2016

India and China Highest Financial Inequality

India and China highest financial inequality among Asia Pacific countries despite the two being among the fastest growing economic, IMF has said.

India and China Highest Financial Inequality

According to the International Monetary Fund China and India have grown rapidly and reduced poverty sharply, but impressive economic performance has been accompanied by increasing levels of inequality.

International Monetary Fund

‘’In the past rapid growth in Asia came with equitable and distribution of the gains. But more recently, the fast growing Asian economies have lifted millions out of poverty they have been unable to replicate the growth with equity miracle’’. Fund said.

As per the report of highest financial inequality, China managed to increase middle class in urban areas as did Thailand. India and Indonesia struggled to lift sizeable portions of their populations toward higher income levels.

‘’In India, differences between rural and urban areas have increased and have been accompanied by rising intra-urban inequality’’. It said.  Many factors have been identified as key factor of the inequality in urban and rural areas in India and China.


China, rapid industrialization in particular regions and the concentration of foreign direct investment in coastal areas have led to substantial inequalities between coastal and interior region. Low educational attainment and low returns to education in rural areas.


Inequality in India is lower than China and rising inequality primarily an urban phenomenon. Rural-urban gap has increased and education attainment has been identified as an important factor explaining in India over past two decades.

India and China Highest Financial Inequality

Two countries have introduced a number of policies to tackle the rising inequality. China introduced the Minimum Livelihood Guarantee Scheme (Dibao) for social protection in the 1990s. Numerous programs are aiming to expand in social safety nets and support for development of rural areas and western regions.

Indian government introduced Mahatma Gandhi National Rural Employment Guarantee Act, to support rural livelihood by providing 100 days of employment. National Education Scheme in education front and Midday Meal. JAM (Jan Dhan Aadhar Mobile) to substantial in financial inclusion. Recently universal bank coverage were launched by Indian government.