Tuesday, January 18, 2022
View PointOpinion: Turn to the 99% in true spirit

Opinion: Turn to the 99% in true spirit

Published: 5th Jan 2022 12:03 am

By Seela Subba Rao

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India is the second most populous country after China with about 1.38 billion people and is the seventh largest country in the world with an area of 3,28,700 km sq. The highly contrasted country has enjoyed a growth rate of up to 10% over many years in the pre-Covid 19 era and is one of the largest economies in the world, with a gross domestic product (GDP) of $1,644 billion.

India’s per capita income increased five times between 2000 and 2019. This does not mean that income of the entire population has increased. The top 1% in India earned 21% of the country’s total income in 2019. The bottom 10% earned only 3.5%. As regards wealth distribution, the situation is similar. The richest 10% owned 80.7% of the wealth in 2019. Thus, only a small percentage of the Indian population has benefitted from this impressive economic boom as the majority of people still live in abject poverty.

The gap between the top 1% and the bottom 50% of the population is widest for India among the major economies in the world. The gap is wider than the US, UK, China, Russia and France. Though people living below poverty line in India is seeing a decline overall, it is not desirable to have increasing inequalities in income and wealth. The government should pay urgent attention to this widening divide and take corrective measures to bring this to acceptable levels at the earliest.

Government Measures

The government of India has introduced many special employment generation programmes to provide relief and scope for gainful employment to the unemployed since independence. Food for work programme, self-employment schemes for educated professionals, skill development programmes, promotion of MSMEs for unemployed youth and rural artisans, are a few in this direction. In addition to this, a plethora of social security measures has been introduced to provide livelihood and succour to the poor from time to time. Although the statutory minimum wage provision is made in India, it has benefitted mostly 10-12% of workers engaged in the unorganised sector.

Though the progressive nature of the tax system has been designed to check income inequalities and concentration of wealth, it has yielded a mixed result. Under the present system of ownership of private property and the law of inheritance, there is no check on income inequalities.

After independence, various legislative measures were introduced for abolishing the system of absentee landlords and other intermediaries and imposing a ceiling on landholdings. But all these measures had not yielded the desired level of success. Since the mid-1980s, deregulation and liberalisation policies have led to one of the most extreme increases in income and wealth inequality. While the top 1% has profited from economic reforms, growth among low and middle-income groups has been relatively slow and poverty has persisted.

Civil Society and Corporates

It is not only the responsibility of the government but also civil society organisations to play a critical role in reducing this gap, as they are considered an essential ingredient of the development process. In urban areas, civil society organisations help the urban poor by facilitating access to credit, improving their homes and surroundings, approach roads, water supply and other infrastructural activities. They make arrangements to provide services especially through slum-and- squatter upgrading programmes, supply of foodgrains, medical assistance, etc.

Many NGOs run major research, awareness-raising growth programmes in addition to empowering the poor at the grassroots level. NGOs also play a key role in filling the void in various government-executed socio-economic development programmes. Corporate companies spend a portion of their profits through Corporate Social Responsibility towards welfare of the poor in both rural and urban areas.

Religious institutions and well know personalities through their foundations and charitable trusts also contribute to philanthropic work like the establishment of old-age homes, hospitals and orphanages. Over the years, NGOs have attempted to bring in a remarkable change in the lives of the marginalised class with their rich knowledge and resources.

Closing Gap

The latest World Inequality report concludes that the bottom 50% share has gone down further to 13% in India as it stands out as a poor and very unequal country, with an affluent elite. This seems due to switching over for greater reliance on big business and privatisation to fix economics and the result has been to beget even more inequality.

So there is a need for adoption of new priorities and policies from the government side to attain social and economic equality. Disinvestment of Central public sector undertakings and public sector banks may not be a permanent solution in an economy where inequality is rising sharply. A high rate of income tax for billionaires may be a way out to generate more revenue for the nation.

Many official functions are organised by governments with a lot of fanfare and grandeur, thereby wasting crores of public exchequer. Austerity measures should be imposed to curb such avoidable expenditure. The funds thus saved can be ploughed back for the implementation of welfare programmes to cover a greater number of the poor.

A change in the mindset of the citizens too is needed. Values like compassion and empathy towards fellow citizens can work wonders. Already certain good Samaritans are on the job, but their number is not impressive. The haves have to share a little more of their resources with the have-nots to bring out tremendous results.

Civil society organisations can promote poverty reduction by pushing for macro-level structural changes through advocacy, lobbying with the government for policy change at the national level and providing effective services directly to the have-nots. If a society has to reduce the level of economic inequality, it must implement the following in true spirit:
• Redistribute from those with high incomes to those with no incomes

• Ensure that a ladder of opportunity is widely available

• Adopt a more progressive taxation system including tax on inheritance

• Empower poor women in rural and urban areas

• Better education facilities for children of have-nots

• More flow of investment in agriculture and focus on risk mitigation mechanism apart from access to credit, quality seeds, plant nutrients, production practices and assured prices for produces.

Periodic studies by research institutions/universities in the poverty pockets of India should be undertaken to assess ground realities. This may help policymakers think about the issue more seriously and come up with better solutions to reduce inequality in income and wealth.

(The author is former Assistant General Manager, Nabard)

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