Open Forum
New Delhi, 6 October 2017
Growth With Equity
FAR-FETCHED IDEAL IN INDIA
By Dr S Saraswathi
(Former Director, ICSSR, New Delhi)
“India’s dynamics are striking. It is the
country with the highest gap between the growth of top1 per cent and the growth
of total population”. This finding of French economists published in newspapers
show that conditions are not changing with regard to inequalities of income
despite overall l growth.
The share of national income accruing to the
top 1 per cent of income earners is estimated to be about 22 per cent of total
income which is said to be the highest level since the adoption of the Indian
income tax 1922.
The IMF has been warning South Asian
countries about increasing inequalities in the past two and half decades which weaken
their capacity to combat poverty. India and China are particularly facing acute
problem of redistribution of incomes as high growth rates have not reduced
inequalities. However, income inequality is a global phenomenon.
A report released by Oxfam is on the same
lines. It reveals a contrasting picture presented by China,
India, Indonesia, Laos, Bangladesh, and Sri Lanka, where over the last two
decades, the share of income increased by more than 15 per cent for the richest
10 per cent of the population, and declined by more than 15 per cent for the
poorest 10 per cent of the population.
Surprisingly, one super power, the US, is one
of the most unequal countries in the world based on Gini Index which measures
the extent to which distribution of income varies from perfect equality. It
ranks far worse than Portugal which is at the bottom among West European
countries.
A study on inequalities in the US shows that
in 24 States, top 1 per cent captured at least half of all income growth
between 2009 and 2013. New York and Connecticut show highest inequality
followed by eight States including California and New Jersey. Worsening
inequality is considered to be one of the most serious issues in American
politics.
There are 25 countries in the world with
least inequality. Based on distribution of income, Belgium
is on top. Income, consumption, and wealth are indicators of financial inequality.
Sustainable Development Goals adopted by
UN Member-States in 2015 aim at ending
poverty, fighting inequality and injustice, and tackling climate change by
2030. Inclusive development -- the over-all aim of the Goals -- specifically covers
equitable quality education and gender equality. Goal No.10 is to “reduce
inequality within and among countries”.
Human Development Index (HDI) is created by
the UNDP to highlight that people and their capabilities should be the criteria
for assessing the development of a country and not economic growth alone.
Inequality Adjusted HDI introduced in 2014 indicates how a nation’s
achievements on three dimensions – health, education, and income – are
distributed. States in India are classified on the basis of HDI as High,
Medium, and Low.
Generally, worst inequality is found in
bigger cities in any country. Posh colonies in the vicinity of slum areas are
common in Indian cities. Glaring income inequality can be seen between households
in the same locality. Both billionaires and destitute pensioners and recipients
of welfare schemes reside in city centres. Approach roads to malls are dotted
with roadside tea shops and platform vendors. A report of the status of Canada
reveals that income inequality is “almost exclusive” to major cities and the
rest of the country is “surprisingly equal”.
State intervention is needed to bridge developmental
gap between States and regions. The gap is due to varied causes like
differences in per capita income, ratio of population below poverty line,
percentage of people employed in agriculture indicating excessive pressure on
land which is a cause of poverty, percentage of people under-employed or in seasonal
employment.
Unequal level of infrastructure leads to unequal
level of production, quality of services, etc.
They are reflected in differential life expectation, infant mortality
rate, literacy and educational level, etc., within the country. Inequalities
are also spatial, gender-based, and age-based.
Much of the disparities in India are between
rural and urban areas because of inequality in infrastructure and
opportunities. The country needs to widen access to health and education to
reach interior villages.
Inequalities between generations are growing fast
in middle and lower income families. They are less visible in rich families in
India, at least in economic terms because of strong legal and conventional inheritance
rights. The rich grow richer with efflux of time and their families for
generations reap the benefits.
Generational gap arising from income,
education, and employment is growing in middle classes. Enormous increase in pay packets in some
sectors and in self-employment in recent years has introduced economic gap not
only between employees in different sectors, but also between generations
within families. The gap is bound to grow and make life miserable for the
elderly in the absence of social security for the aged. Net and mobile phones have
introduced a new inter-generational divide.
A striking contrast is presented by Japan
which has on the whole lower level of inequality than other developed nations.
High income tax and inheritance tax rates work against accumulation of wealth
for posterity. It is said that the richest families lose their wealth within
three generations.
Gender-based inequality -- a universal
phenomenon -- varies in intensity depending on educational and environmental
factors. The Global Wage Report of the ILO for 2016-17 States that India
suffers huge gender gap in pay and is among countries with worst levels of wage
disparity. It points out that in India, women form 60 per cent of the lowest
paid wage labourers, but only 15 per cent of highest paid wage-labourers. Equal
pay for equal work is accepted in principle, but not universally practiced.
Reducing inequality requires a policy package
comprising inclusive development, employment, investment in education and skill
training, universal healthcare, and effective redistributive tax system.
Universal basic income scheme can help eliminate acute poverty, but cannot
obliterate inequalities.
There are certain other forms of inequalities
in India that have settled themselves by long practice. The most disgusting
among these are what has come to be termed as “VIP culture” and privileges
enjoyed by power holders and celebrities. Some of these privileges are granted
by law and regulations and some are assumed without sanction. Review of these is
required in the interest of removing unearned benefits.
All said and done, equality is a political
ideal to be promoted with political authority. Political parties that promise
schemes towards equality often end up in lowering the top rather than uplifting
the bottom. The entire politics over Reservation Policy is around correcting
inequalities. The policy has widened
opportunities but nowhere near achieving an end to inequalities.
Federal States face an additional problem of unequal
development between provinces/States. In India, the Union Government is
promoting competition among States for construction of hospitals and
educational institutions, infrastructure projects and for hosting national
events. This may promote healthy
competition among States that are near equal and provide incentives for others
to develop basic facilities necessary for projects.
Regional and local actors, who have the
knowledge of local conditions, have an important role to play in erasing the
impression that growth with equity is a far-fetched ideal in India. ---INFA
(Copyright, India
News & Feature Alliance)
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