The research advocacy “Oxfam” recently published a comprehensive report on the economic inequality in India.
The report is glaring and calls for wide corrective actions.
What does the Oxfam Report say?
A recent report titled “Widening Gaps - India Inequality Report, 2018” was released by ‘Oxfam India’ revealed the extent of inequality in the country.
It has been pointed out that while inequality was stagnant in the 1980s, it started to increase since 1991, and continues to surge at present.
This has mainly been attributed to the “lopsided” economic and developmental policies of successive governments, particularly after liberalisation.
Significantly, the wealth of the India’s Billionaires (totally 101 in 2017) was 10% of GDP in 2013 and has subsequently rose rapidly to about 15% currently.
Also, a large share of wealth of the richest lot has been attributed to “crony capitalism” rather than to innovation or the fair rules of the market.
Further, Specific policy choices favouring capital rather than labour, has inherently become part of the growth trajectory in India.
These designs along with accumulated inheritances has consequently, seen the share of the poorer lot dip continuously in the wealth matrix.
What are some of the specifics?
Regional divergence – Differential wealth between states have existed even before independence and the Indian planning process had aimed to undo this.
But the outcome has not been as expected as income inequality between states has been found to be continuously increasing over time.
Hence, the rise in inequality in India is due to – growing income divergence between states and increasing inequal income distribution within states.
Caste Groups - Among various social groupings, SCs continue to remain the most disadvantaged, with a significantly lower per-capita income share.
Also, declining trend in the income shares for the ST group, with a corresponding increase in the share of others has been deciphered.
Religion - Religious identities too has been found to be significant for an individual’s access to basic services, and his ability to mobilize resources.
In some cases, these may cause isolation, exclusion, and stereotyping of communities, which can impact jobs and livelihood opportunities.
Signficantly, smaller minorities such as Christians, Parsis and Jains have a larger share of income/consumption than their population share.
But for Muslim populations, this is not the case and they even seem to fare worse than SC and STs in urban areas.
The share of Muslims in national income (per-capita), has also indicated a decline over a period of time, both in rural and urban areas.
What needs to be done?
Economic inequality is more concerning in Indian than elsewhere as it reinforces existing societal fractures along - caste, religion, and regional lines.
Apart from being a moral concern and vision of the constitution, reducing inequality is central for the functionality of Indian democracy.
To reverse this trend, tax collection should be enhanced through progressive direct taxation - such as introducing wealth and inheritance taxes.
This then needs to be spent on health, education and nutrition for the underprivileged, focusing especially on the early childhood development.
