What Sways Income Inequality in India?

This study attempt to analyze three questions: (i) what drag income inequality in India? (ii) Are factors affecting income inequality the same both in the short and long run? and (iii) Does Kuznets’ hypothesis hold in the context of India? Using ARDL model, the results show that a higher level of development, human capital, population growth, and import volume drag down inequality. India’s current economic development intensifies inequality significantly in both the short-run and long run, while India’s higher development reduces income inequality. Thus, Kuznets’ hypothesis holds in case of India. Also, the factors affecting inequality remain the same, regardless of time.