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Rising Inequality

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January 23, 2018

What is the issue?

  • Indian Prime Minister leads the “largest ever” Indian contingent to the World Economic Forum 2018 in Swiss Alps town of Davos.
  • With 'rising global inequality' being an important agenda in the meet, it is imperative to reflect on the inequality scenario in India.

How (in)equal is India?

  • Credit Suisse Global Wealth data for India in 2017 highlights that 73% of the increase in wealth in India went to the top 1%.
  • India now has around 100 billionaires, the number having gone up from nine in 2000.
  • Notably, 37% of India’s billionaires have inherited wealth.
  • There are only 4 women billionaires and 3 of them inherited family wealth.
  • India is currently shining for its top 1% and arguably also for its top 10%.
  • It needs to spread this to the middle 40% and most of all to its bottom 50%.
  • Notably, these bottom proportions comprise largely of the Dalits, Muslims, tribals, and women, making it a social inequality as well.

How serious is inequality?

  • Global inequality is rising to unprecedented levels, at rates not seen during the last 100 years.
  • It is worrying because it makes economic growth unsustainable, corrodes politics and undermines democracy.
  • It is also leading to a breakdown of the social contract, as people end up in violence, crime and corruption as ways to get rich.
  • In this context, this year’s agenda for WEF includes “sustainable and inclusive economic development”.
  • Indian Prime Minister's keynote address at the forum is on “Creating a Shared Future in A Fractured World”.
  • To make it meaningful, India should devise means for sharing the wealth of its top 1% with its underprivileged bottom sections.                      

What should the government do?

  • Jobs - The government should formulate measures to promote inclusive growth.
  • It must be ensured that the income of the bottom 40% grow faster than that of the top 10%, to narrow the current income gap.
  • Some of the ways for achieving this include:
  1. promoting labour-intensive sectors to create more jobs
  2. increasing investment in agriculture
  3. implementing fully the social protection schemes
  • Tax- Government must take stringent measures against tax evasion and avoidance.
  • The super-rich could be taxed by re-introducing inheritance tax and increasing the wealth tax.
  • Corporate tax breaks could be reduced and eventually done away with.
  • Data - Lack of availability data has allowed inequality to creep up to such high levels in India, going unnoticed by the policymakers.
  • It thus calls for the government to collect and make available, regular and high quality data on income and wealth.

 

Source: The Indian Express

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