India's rich-poor divide is widening
The elite one percent corner benefits of economic reforms, says latest World Inequality Report
India’s poor have become poorer over the years with the bottom half comprising over 600 million Indians sharing just 6 percent of the nation’s wealth, hinting at widening inequality.
“India stands out as a poor and very unequal country with an affluent elite,” says France-based World Inequality Lab in its latest global report penned by its co-director Lucas Chancel and coordinated by French economist Thomas Piketty.
The top one percent of Indians owned more than one fifth of the total national income in 2021 while the bottom half earned just 13.1 percent, said the report.
The findings are in contrast to Indian Prime Minister Narendra Modi’s popular slogan “Sabka Saath, Sabka Vikas” promising to take along and ensure development for all, which helped him come to power in 2014.
Modi generated great hope among ordinary Indians promising better incomes and jobs for all, saying at election rallies, “Acchey Din Aaane Wale Hain” (Good days are in the offing).
The picture painted in the World Inequality Report appears gloomy.
“If the middle and neo-middle classes were wondering why things haven’t improved despite the hype around Modi’s promised ‘Acchey Din,’ this report makes it crystal clear now,” said Ramakanto Shanyal, an educationist from West Bengal.
He pointed out a plethora of problems that had caused the economic governance model of the country to fail over the years.
“India has to produce at least 10 million new jobs every year. This is not happening. A large section of the population is engaged in the informal economy while more than 60 percent of the middle class are unsure about keeping their jobs and earning in the next six months or so,” said Shanyal.
Trinamool Congress leader P. Chakravarty agreed. “Modi’s act of demonetizing certain currency units [removing and replacing them as legal tender in 2016] proved disastrous. India’s unemployment rate has now risen to a 35-40 year high.”
The report shows the increase in private wealth of well-to-do people is remarkable, up from 290 percent in 1980 to 560 percent in 2020.
Crony capitalism, it is said, is on the rise. But government officials do not want to speak on the record, saying it is an unofficial study by a private organization.
They admit that things had started going wayward ever since the economic liberalization of the Indian economy in 1991.
“There was policy slackness and absence of vision. The FDI [foreign direct investment] inflows since the 1990s were mostly directed towards already affluent and developed hubs such as Mumbai, Delhi, Bangalore, Hyderabad, Chennai and states such as Gujarat, “ said a Commerce Ministry official.
Modi was the chief minister of Gujarat from 2001 to 2014 and is said to have accommodated business captains like the Ambani brothers and Gautam Adani. But such allegations are political in nature and cannot be proved.
A BJP leader in Delhi dismissed the allegations of nepotism as unfounded but admitted that compared to other Indian states, Gujarat and Mumbai city in the west provided friendly working and business atmosphere.
There are other bitter facts of India’s economic governance that have contributed to widening the gulf between the rich and poor.
“Between 1947 and 1991, the economy was driven by corrupt bureaucrats. Their family picnics were more important than national economic growth. The 1991 liberalization of the economy ensured prosperity no doubt, but India also saw a rise in its economic disparity,” said Naushad Khan, a trader in East Delhi.
Government officials said that after returning to power in 2019, the Modi government announced further liberalization, removing restrictions on FDI in multiple sectors including coal mining and contract manufacturing.
Thus India made major gains in the World Bank’s "ease of doing business" rankings, moving up to number 63 out of 190 economies evaluated, officials pointed out.
But Adhir Chowdhury of the opposition Congress told UCA News: “India remains a difficult place to do business and additional economic reforms are necessary.”
But that remains a contentious zone. On Nov. 19, Modi announced the withdrawal of three contentious farm laws after the government failed to convince farmers of their merits or the objective of reforming the nation’s agriculture sector, especially marketing of farm produce.
“The repeal of farm reform laws is the real India story, though a bitter one. It will help a small segment of farmers and merchants in two-three states. But the whole country will continue to pay a heavy price for it,” said Shanyal.
(UCAN report)
India stands out as a poor and very unequal country, with an affluent elite.
The average household wealth in India is around Rs 9,83,010.
The bottom 50% of the nation can be seen to own almost nothing, with an average wealth of Rs 66,280 or 6% of the total pie.
The middle class is relatively poor with an average wealth of Rs 7,23,930 or 29.5% of the total. The top 10% owns 65% of the total wealth, averaging Rs 63,54,070 and the top 1% owns 33%, averaging Rs 3,24,49,360.
According to The World Inequality Report, 2022, the private wealth increase seen in India over this time is also remarkable (up from 290% in 1980 to 560% in 2020).
While India’s economy was highly regulated in the 1980s, and a very strong public sector controlled large segments of the economy, the private sector was significantly larger than in communist China (especially in the business sector). Today, both Asian giants have similar private wealth-to-income ratios. The speed and scale of the change in these economies surpasses that seen in industrialized countries:
In 2021, the wealthiest 10% of the population own 65% of total household wealth in India.
The average national income of the Indian adult population is Rs 2,04,200. Here, the bottom 50% of earns Rs 53,610 while the top 10% earns Rs 11,66,520, over 20 times more. In India, the top 10% and top 1% hold 57% and 22% of the total national income respectively while the share of the bottom 50% has gone down to 13%
No comments:
Post a Comment