Indian Wonder of Increasing Billionaires amidst Growing Inequalities
By;Dr. Prashant Kumar Choudhary, Assistant Professor, Department of Public Policy, Manipal Academy of Higher Education, Bangalore. Jadhav Chakradhar, Assistant Professor, Centre for Economic and Social Studies (CESS), Hyderabad.
Publised;Odishabarta
Oxfam’s recently published report on rising inequality in the world, and India in particular, presents the grim reality of the failure of the capitalistic economic system, which assists the industrialist class in amassing enormous wealth and is incapable of bridging the income gap between the rich and the poor.
The report finds that the richest 1% holds more than 45 per cent of global wealth while the bottom half of the poor population has just 0.75 per cent. At the individual level, just 81 billionaires of the world hold more wealth than 50 per cent of the population combined. One of the prime reasons for the rising wealth of the rich is a reduction in corporate tax. In rich countries, falling rates of tax on the rich have coincided with a rising share of income going to the rich top 1% population.
To lure the industrialist class for higher and sustained investment, countries cut down the corporate tax to be levied, which invariably contributes to the accumulation of wealth in their hands and the widening income gap between the rich and the poor.
When it comes to India’s widening inequality between the rich and the poor, the report finds that the top 5 per cent own nearly 62 per cent of the total wealth, and the top 1 per cent own nearly 40.6 per cent of the total wealth in India.
The gap coincided with an increasing number of billionaires in the country over the years and the highest number of poor in absolute terms. The concentration of wealth is also on the lines of caste stratification, as the report suggests. i.e., the caste considered to be at the top, the upper caste, has higher concentrations of wealth than those at the bottom of the caste system. It provides the advantage to the former in social and economic domains and incapacitates the latter at present and over the generations.
India, to help the industries and to lure foreign investments, slashed the corporate tax slabs from 30 to 22 per cent, in a total loss of INR 1.84 lakh crore. Apart from the state, Indian banks (private and public) offer huge loans to industries at a substantially low-interest rate. Amidst the rising interest rates for the average consumer, banks have written off a massive INR 11 lakh crore in non-performing assets (bad loans) over the preceding six financial years.Additionally, the recent research that was conducted in 2017 by LucasChancel and Thomas Piketty, the average annual real per adult income growth in India increasedfrom 1.7% during the period of 1951–80 to 3.3% during the period of 1980–2015. In contrast, itsped up from 1.2% to 5.1% for the top 10% income group and from 0.2% to 6.6% for the top1% income group, while it slowed down from 2.2% to 1.9% for the lowest 50% income groupduring the same time period.
The debilitating impacts of wealth inequality are manifold. It has stripped 70 per cent of Indians from as basic a necessity as a healthy, consumable diet leading to the yearly deaths of 1.7 million owing to diseases resulting from a poor diet. Estimates show that sixty per cent of Indians live on less than INR 262.4 per day. With just 2.1 per cent of Gross Domestic Product as Government Health expenditure in 2020-21, the life expectancy of poor and marginalised communities compared to the rich is low. A studyshowed that the life expectancy at birth was 65.1 years for the poorest fifth of households in India compared to 72.7 years for the richest fifth of households. This constituted an absolute gap of 7.6 years and a relative gap of 11.7 per cent. Even caste and life expectancy are intricately connected. The average Dalit woman dies 14.6 years earlier than a woman from a higher caste. The life expectancy of the tribals in India is also approximately three years lesser than the non-tribal population.
Another important marker of development which is stressed due to the lower budgetary allocation is education. Declining budget for education is the major concern for proper implementation of both generals (for all students) and compensatory schemes (related to social justice objectives), which is reflected in the unavailability of schools, vacancies of teachers in them, and higher dropout rates. The unequal socioeconomic structure of the country and the influence of the socio-economically favoured groups on the formulation and application of economic policies may be to blame for the growth in inequality.
It is important to be concerned about mounting income gaps between rich and poor not only because it can result in the denial of equal opportunities in the economy, but also, perhaps more importantly because it can hurt health and poverty. Additionally, the skewed distribution of employment is one of the reasons for the rising inequalities in the Indian economy. These facts are amply supported by the most recent official employment data from the NSS-PLF survey for 2018–19. Compared to the national average of 5.8%, SC employees had a higher unemployment rate (6.4%) in 2018–19. (5.9 per cent for high castes, 5.8 for OBCs and 4.3 for STs).
The report’s findings are a shocker for policymakers and media, which are so enraptured over the increasing number of billionaires in India under the capitalistic economic system of production. However, in reality, as Prabhat Patnaik paraphrased Karl Marx, ‘capitalism’s spontaneous tendency is to produce wealth at one pole and poverty at another. Therefore, the sheer production of wealth is not a panacea for overcoming poverty. It is simply the other side of the accentuating of poverty. i.e., the increasing wealth of the industrialist class and poverty of the masses occur simultaneously and in equal proportion.
Many believe that progressive taxation of the superrich (top 1% wealthiest) is the way to manage the rising inequality in the country through diverting this fund for the improvement of several indicators such as health, education, housing, sanitation etc.
However, this recommendation is a double-edged sword tied with the fear of capital fleeing the countries, which would put them in a ‘race to the bottom,’ i.e., to lower the tariffs; on another end, countries cannot simply afford to let the income inequality unbridled. This is the reason the prophetic words of Jean-Jacques Rousseau are reverberating at Davos, 2023 “When the people shall have nothing more to eat, they will eat the rich.”
