India poor & unequal

Inequality Dynamics

By Dhurjati Mukherjee

Inequality is a critical issue for debate and investigation. The recent World Inequality Report 2022,saysglobal wealth inequalities are even more pronounced than income inequalities. The poorest half of the global population barely owns any wealth at all, possessing just 2% of the total. In contrast, the richest 10% of the global population own 76% of all wealth.Of concern to us is its assessment that: “India stands out as a poor and very unequal country, with an affluent elite.”
The report, which highlights growing inequality across countries and uses Purchasing Power Parity (PPP) as an index states that the average national income of the Indian adult population is €PPP 7,400 (or INR 204,200).While the bottom 50% earns €PPP2 000 (INR53,610), the top 10% earns over 20 times more (€PPP42 500 or INR1,166,520). And while the top 10% and top 1% hold respectively 57% and 22% of total national income, the bottom 50% share has gone down to 13%.
The report makes note of a relative change over the decades. Under British rule, India’s income inequality was very high, with a top 10% income share around 50%. Following independence, socialist-inspired five-year plans contributed to reducing this share to 35-40%. Since the mid-80s, deregulation and liberalisation policies have led to one of the most extreme increases in income and wealth inequality observed in the world. While the top 1% has largely benefited from economic reforms, growth among low and middle income groups has been relatively slow and poverty persists. Over the past three years, the quality of inequality data released by the government has seriously deteriorated, making it particularly difficult to assess recent inequality changes.
India’s wealth distribution in average household is equal to €PPP35,000 or INR983,010 in comparison to China’s €PPP81,000. The bottom 50% own almost nothing, with an average wealth of €PPP4,200 (6% of the total, INR66,280). The middle class is also relatively poor (with an average wealth of only €PPP26 400 or INR723,930, 29.5% of the total) as compared with the top 10% and 1% who own respectively €PPP231,300 (65% of the total)and over €PPP6.1 million (33%), INR6,354,070, and INR32,449,360.
The report also reiterates gender inequality in the country.The report says: Gender inequalities in India are very high. The female labour income share is equal to 18%, which is significantly lower than the average in Asia (21%, excluding China). This value is one of the lowest in the world, slightly higher than the average share in Middle East (15%).
Clearly, the government needs to get its act together and ensure that its slogan of ‘inclusive growth’ doesn’t remain on paper. Huge resources required for both social and physical infrastructure development has been moving at a rather slow pace due to inadequate resources at the disposal of the government.
A case in point is the Centre’s flagship 100-day job scheme, MGNREGA which faced wage dues of Rs 9682 crore as 100 percent of the funds allocated for the current fiscal had been exhausted by November-end. According to government estimates, more than 32 lakh migrants returned to six States – Bihar, Jharkhand, Uttar Pradesh, Rajasthan, Madhya Pradesh and Odisha. The Centre launched the Gareeb Kalyan Rojghar Yojana under which the migrants, who had returned to their native places, were provided job cards under NREGA.
As a result, a total of 7.75 crore households were provided work in 2020-21, the first year of the pandemic which was an increase of 41 percent over figures of the previous fiscal. In June, the Centre allocated Rs 73,000 crore for the current fiscal which was 34 percent less than the revised estimate of over Rs 1.11lakh in 2020-21, obviously due to resource constraints.
The inequality factor needs to be understood here as the allotment of funds for the rural sector, where around 60% of the population resides, is much less compared to the urban sector. The income scenario also reveals that per capita income in the rural sector is much less than those living in their urban counterparts. The priorities of the government do need a relook, as while it is faced with inadequate resources, it is the poor and EWS which suffer the most.
And whileinaugurating the Kashi Viswanath corridor,Prime Minister Modichooses to comparevirasat (heritage) with vikas (development) and state that building the Ram temple in Ayodhyais the same as setting up a medical college in every district or giving a grand form to Baba Vishwanath temple with pucca houses for the poor, but it’s definitely not the case. There appears more of a priority of projecting the majority religion by spending crores on temples and religious corridors rather than initiating projects at grass-root development, which would improve the livelihood opportunities of the poor.
Added to this is the debate on reforms, implying reduced taxation for the rich and making available to them all facilities, including land at low prices. Also a section of economists feel that higher taxes are not a panacea for attacking poverty. They fail to realise that for high populous countries like India, higher taxes translates into more resources, which could be geared for development work. Moreover, with huge resources required for social infrastructure development, taxing the rich and super rich is imperative to redistribute and to gear up the process of grass-root development.
As per government’s own data, 25% of India’s population are poor in terms of the multi-dimensional index that takes into account education and health indicators. Let us take the realm of education, where many private schools have got land from the government at reduced prices but fail to provide reservation for students from the poor or EWS. Also in the health sector, the underprivileged class cannot get treatment at private nursing homes. The disparity between the rich and the low income groups or the EWS, not to speak of the poor, steadily builds up as good jobs go to the highly educated, English speaking upper caste people.
In a materialistic society, where money power rules, how can economic disparity be resolved? This is more so as the focus of the government is not geared towards ameliorating the conditions of the poor but on building and/or beautifying temples, statues as also modernising airports, importing sophisticated ammunitions etc. Resources undoubtedly are going in the wrong direction and helping the upper middle class and the rich. Another aspect is the nexus between politicians and businessmen, thereby further ignoring the interests of the impoverished masses. How is it that big business, manage to goscot-free without paying loans taken from nationalised banks and ordinary folks are harassed for delay in payments of their loans?
The strategy being followed currently haslittle chance of reducing disparity. Even the much hyped Indian economy reaching $5 trillion is unlikely to have an effect in breaching the inequality. India is now among the most unequal countries in the world. The report notes: Policykept inequality in check, and policy changes let it run amok. Therefore, profound policy changes are needed for things to fall back in place. The government would do well to go through the report with a fine-tooth to get policy solutions as these ‘often exist’ and ‘focus on how to get the plumbing right, so that policy can do its job.’ — INFA