IndiaEconomic inequality will prove to be dangerous

Economic inequality will prove to be dangerous


Author: Anand Pradhan
Some bitter truths are sometimes hidden or hidden in the glare and noise of the GDP growth rate figures in India. But the global inequality report released last week has once again exposed the reality hidden in those dark corners. According to the report, India continues to be a poor and highly unequal country among a handful of rich, despite economic reforms of the past three decades and a relatively fast growth rate of GDP.

middle class is also suffering
According to the report, 57 percent of the country’s total national income is going to the richest 10 percent of the country’s people and 22 percent of that is also going to the super rich, while the 50 percent sitting at the bottom of the population accounts for only 13 percent of the Indian national income. I am somehow forced to make a living. The condition of the 40 percent middle and lower middle class of the country is also not good, who are living in only 30 percent of the total national income. Not only this, the situation is worsened by wealth sharing, which plays a big role in making the economic inequality even more acute, deep and permanent. According to the report, about two-thirds of the country’s total wealth, or 65 percent, is occupied by the top 10 percent of the country’s rich, while only 6 percent of the wealth comes in the share of the bottom 50 percent of Indians. In this too, the top one percent of the super-rich occupy 33 percent of the total wealth, while the middle and lower middle classes of 40 percent of the country’s population have only 30 percent of the total wealth.

As a result, the economic inequality in India, that is, the gap between the rich and the poor, has reached a historic high, where it has left behind the inequality created by colonial plunder and exploitation of the British imperialist era. During the British colonial rule (1858–1947), the share of the top 10 percent of the rich in the country’s total national income was about 50 percent, which has increased rapidly to 57 percent in the 74 years of independence, especially in the three decades here.

But to understand the rapidly growing inequality in India, it is necessary to stop here and look at one more fact. The share of the top 10 per cent of the country’s rich in total national income declined to 31 per cent in 1981, during the alleged Hindu growth rate of an average of three per cent of GDP in the first three decades of the five-year plans influenced by socialist economics after independence. The share of the 40 per cent middle and lower middle class had gone up to 47 per cent and the lower 50 per cent of the poor had reached 23.5 per cent.

Things began to change in the eighties when economic reforms opened the economy to private domestic and foreign capital under a $5 billion loan from the International Monetary Fund and its associated terms. There is no doubt that in 1991, under the economic reforms, the policies of globalization-liberalization-privatization started a period of sharp jump in the economic growth rate and there was a lot of economic prosperity. But a large part of this prosperity started going to the top 10 percent of the rich, especially the top one percent of the super-rich. The poor started getting poorer, the income of the middle class also started shrinking.

In 1991, the share of the top one percent of the super-rich in the total income of the country was 10 percent and the top 10 percent of the rich had 34 percent, while the share of the bottom 50 percent of the population was 22 percent and 40 percent of the middle and lower middle class had 45 percent. Income came. But in the last three decades, the share of the top one per cent of the super-rich in total national income has more than doubled to almost 22 per cent and that of the top 10 per cent has risen from 67 per cent to 57 per cent.

At the same time, in these three decades of prosperity, the share of the bottom 50 per cent Indians in the total national income has come down almost three times (276 per cent) to just 5.9 per cent. At the same time, in these three decades, the income of 40 percent of the middle and lower middle class of the population has also come down by 52 percent to just 30 percent.

It is clear that the nectar of prosperity that is coming out of the sea churning of economic reforms is going to the top 10 percent of the rich and in that too the top one percent of the super-rich. Due to this sharp and ever-increasing economic inequality, two countries are being created within one country. For a developing country like India, the consequences of ignoring it can be fatal or say that they are happening. Firstly, the growing economic inequality is slowing the wheel of economic growth as the demand is being negatively impacted in the economy due to lack of expected growth in income and wealth of 90 per cent of the population. Second, the growing economic inequality poses a great threat to democracy and also to social peace and stability. Dr. Ambedkar had warned in his last speech to the Constituent Assembly that democracy cannot run in a socially and economically unequal society.

things can turn around
As this report says, growing economic inequality is not a natural and inevitable consequence of rapid economic growth, but a political election, which the country can reverse if it so desires. The report also suggests a number of measures to control the economic disparity, especially by increasing tax income and equitable distribution. In the report, Nobel laureate Indian economist Abhijit Banerjee insists that before all economic and political power is concentrated in a handful of hands and fighting becomes difficult, it is necessary to stand up to the challenge of growing economic inequality. Is. Is India listening to this message?

Disclaimer: The views expressed above are those of the author.