Despite being among the fastest growing economies, India and China have the highest levels of financial inequalities in Asia, the International Monetary Fund (IMF) has said in a report.

According to the IMF, China and India have made rapid economic progress and alleviated millions from poverty. However, the efforts to eradicate poverty in both countries has also been accompanied by increasing levels of inequality.

Like Us on Facebook

"In the past, rapid growth in Asia came with equitable distribution of the gains. But more recently, while the fast-growing Asian economies have lifted millions out of poverty they have been unable to replicate the 'growth with equity' miracle," the IMF said.

The IMF report cited various factors responsible for the increasing economic inequality in both Asian nations.

In China, the uneven growth of industrialization and the overwhelming concentration of foreign direct investment in the coastal region has fueled financial inequality between the coastal and interior regions. The low level of education among rural masses has also been cited as a major factor by the report.   

In India, the IMF report said that financial inequality is largely an urban phenomenon. The rising rural-urban income gap has been blamed for this. Higher inflation in Indian villages and low literacy rates has been cited as two other factors.   

Both India and China have introduced various policies and schemes to address the issue of rising financial inequalities. For instance, China introduced the scheme of Minimum Livelihood Guarantee in 1992 to offer social protection to vulnerable members of the population.

However, economic experts in both countries claim that such schemes are poorly executed and therefore do not bring about the desired social transformation.

TagsIMF, International Monetray Fund, china, India, Chinese Economy, Financial Inequality, Indian Economy