Economic Highlights
New
Delhi, 14 October 2011
Rich Vs Poor
RETHINK
PLAN APPROACH
By Shivaji
Sarkar
The Approach Paper to the 12th Five Year Plan
has not taken care of the latest debate on the number of affluent and the
growing number of poor. The most recent TNS's Global Affluent Investor study
puts India
among the top five nations where the affluent have more than $100,000 .i.e. Rs
50 lakh to invest on an average, alongside the UAE, Singapore, Hong Kong, and
Sweden. The number of such affluent is stated to be a little over 27 lakh, or
about one per cent of the population.
Planning Commission Deputy Chairman Montek Singh Ahluwalia almost
simultaneously gave a statement that was based on S Tendulkar committee report
of 2009 on poverty, that there would be 65 per cent-- over 78 crore people who
would be poor. In 2009, the figure was stated to be at 36 per cent, though that
too was disputed. Ahluwalia accepts that the rest of the 35 per cent, are also
not living in a very happy state.
Should there be a glee over the TNS survey? Perhaps not, even while accepting
that there are about 27 lakh people, who constitute more than many European
countries, including Germany,
are not at the same level of comfort. Over 15 per cent compounded inflation
rate has eroded much of their wealth. They have far less purchasing power
capacity than the affluent in Europe or the US as the currency value in these
countries is higher with a capacity to buy more.
Thus, the Indian rich are poorer than the rich anywhere in the West.
They are also far less numerous than the number of rich in the recession-hit US, which has
over 31 million rich. Apparently, the Approach Paper neither takes this into
account nor how the number of poor is increasing or how those on the edge are
slipping to the poverty level.
Indeed, the growth approach is misleading. It was based on the concept
of trickle-down effect, which in effect means that as there are more affluent
people, their extra income would be passed on to the other deprived groups.
This sadly has not happened. The reasons are many: As there is an economic uncertainty, those who
are slightly well-off have tightened their purses to meet eventualities. Taxes
are high on those marginalised rich, if they could be called so. Thus there is
heavy erosion on their income. The rest of their comfort has been robbed by
high inflation of 15 plus percentage and high interest rates.
In the US or Europe, the rate of inflation despite an increase remains
at a low level of 3 to 4 per cent. Their currency has higher purchasing power
and all this makes their rich richer than the so-called affluent in India. They pay
a very low interest rate against almost a penal interest rate in India.
Therefore, planning for the next Plan has to take this into account. This
apart, debate and discussions should now refocus on how to rid the country of
poverty and pep up agriculture. It also needs to refocus on the galloping
disparity. Surely, there is no pride for a country of 121 crore people that has
only 27 lakh near affluent people after over six decades of Independence.
We all know that the socialistic concept had abhorrence for the rich. It
is no crime to be rich but it is not a healthy social trend to have so few
people who qualify to be called so. It is a pointer to the failure of the
planning process and its concept. The US
with 31 million – viz India’s
less than 3 million – has a better chance of getting back to recovery. And by
this comparison, India’s
economy should be called an ailing one.
The Public-Private Partnerships are designed to privatise profits and
socialise losses. Policies are being designed to allow individuals to loot the
Government, as an extra benefit. Government finances get driven into deficits.
This has pushed the State into financially fragile zones. This fragility can be
used to create panic for loosening rational checks and extract further
advantages for corporate or big business out of the State funds.
Candidly, it calls for greater regulation
to check the plunder of natural resources and public funds and banks. The
recent State Bank of India
crisis is one such pointer. But the planning process has not taken care of many
of the genuine problems of the corporate.
Undoubtedly, the nation has to discuss the
new approach to the policy of development. The best one would be to immediately
stop the 12th Plan and enter into a one-year planning process for
2012. The interregnum could be used to decide the new focus – how to reach the
benefits of the planning process to a larger segment of the population so that it
could come out to join – not alleviate from poverty – the affluent.
A fewer number of outside the poverty net has
caused severe problem for raising revenue. The number of taxpayers, and that
includes many just above the official poverty level, are still about 3 per cent
– about 4 crore – of the people. This is causing greater anxieties as tax
realisations till September – indirect tax increase at 1.2 per cent – Rs 28,510
core and direct corporate and income tax
at 7.2 per cent – a mere Rs 1.95 lakh crore, customs duty decline at 11 per
cent – Rs 101.2 crore - are slowing
down. This shows the impact of food inflation – a steady 9 to 10 per cent or
more, high interest regime and high taxes.
The planning process has to take a look at
all this. It has also to refocus on rural and agriculture economy wherein 72
crore people still live on it. This has been gravely ignored repeatedly in many
Plan periods. Of late, even the Khadi sector has entered a crisis, forcing greater
dependence on the corporate.
The planning process has to change the stress
to agriculture –not a corporatorised one - so that there are more affluent
people who could contribute to the Government’s kitty, which could then fund
development.
The debate is not rich versus poor. It is
about broadening the process of development and including the largest segment
of the population. If the country wants to be a super power, it has to rise on
the strength of its people and not the few corporate. ----INFA
(Copyright,
India News and Feature Alliance)
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