Spotlight

New Delhi, 11 January 2024

Of Poverty & Inequality

POLL PROMISES DON’T USHER CHANGE 

By Dr. S.S. Chhina

                                (Senior Fellow, Institute of Social Sciences, New Delhi)                                           

The New Year demands introspection by the ruling dispensation whether the world’s largest democracy has made the progress in the right direction. Since 1952, when the first general election was held in India, the process to make promises got started. All the political parties made a number of these, mainly concerned with removing unemployment and creating social and economic equality in the society. But inequality, poverty and unemployment went on thriving, similar to the surge in poll promises. Actually, inequality of income is itself an impediment for development and prosperity. The impression is given in every election that there would be perfect equality, full employment, and prosperity after these are done. But the situation has sadly remained more or less the same as it was seven decades earlier. 

Income inequality, unemployment and poverty -- all the three factors are closely related with each other, wherever there is unemployment there is poverty and this unemployment is based on income and wealth inequality. When there are very rich, which are few on one side and large number of poor on the other, the level of effective demand is low. The rich people save much, but whatever is not spent it does not become the income of the others. The gap between total income and total expenditure went on thriving. 

When the previous goods and services do not sell, there is no need to prepare for the new ones, no need of more employment, rather there is retrenchment among the existing employed people. It leads to the vicious cycle of poverty. People are poor as they do not have employment. As the income is declining, the demand is declining, surplus production leads to unemployment. This vicious cycle is required to be broken for sustainable development, but it’s possible only if there is equality of income and wealth. 

The countries having equality of income are prosperous, there would be full employment, social security and higher rate of development along with sustainable development. But the countries having inequality are suffering from stagnation, unemployment and poverty along with other economic and social evils. In 1929, when the world was facing big depression, its cause was diagnosed as the lack of effective demand and the remedies suggested were aimed to raise the demand either through credit, instalments and generation of jobs in public works, because private entrepreneurs were not coming forward because of the declining demand. The then Soviet Union was the only socialist country at that time, but the great depression had no impact on its economy and it was developing with a satisfactory rate of growth. 

After Independence, measures were introduced to create equality of income and wealth. The Constitution prescribes establishing the socialistic pattern of society in its directive principles of State policy. Public sector enterprises were started. But inequality went on rising. According to a report in 1939-40, 1% of the population was holding 20.7% of the wealth. But at present because of the surge in inequality, 1% of the rich population is holding 58.4% of the wealth. 10% of rich population is holding 80.7% wealth of the country. In 2017, the 73% of wealth rose for only 1% of population, whereas 67 million that includes 50% more poor population, realised only 1% hike in their wealth. 

At the time of independence 75% population of India was engaged in the profession of agriculture but there was the ‘Zamidari’ system. There were landlords holding thousands of acres of land on the one side and the land-less tenants on the other side. The Zamindari system was abolished and the ceiling on the upper limit of land holding was imposed ostensibly with two objectives, one to create social equality and second to make the best use of land. But was equality in respect of ownership of land created? No, the situation presented by Punjab shows that the objective of equality could not be realised by this act and similar is the situation in other States. 

Punjab is the dominant farm state. In all 33% of the holdings possess less than five acres of land, but this number of holdings are having only 2.36% area of the State. On the other side there are only 5.28% of the holdings which have their farms above 25 acres of land but they possess 21.68% area of the State. The aspect of inequality of wealth is palpable in the ownership of the land holdings. The large holdings do not belong to the peasants  but with the persons who are engaged in other professions than farming. It also vindicated the concept that imposing of ceiling on land could not yield the desired results. 

When the upper ceiling on land holding was imposed, it was suggested by many social reformers that ceiling on urban property should too be imposed, but this suggestion could not be approved on the plea that it would adversely affect the industrial growth, where India was already lagging much behind. 

But this yielded another form of inequality in the country. Some of the residential houses are sprawling in acres, whereas there are four/five families living in 100-yard plots. There are 80 million people in the country that do not have any house, and are spending their lives in huts on the roadside. They have no reach to purchase the land and the prices of these plots are thriving because of the fact of inequality in income and wealth. 

The situation explained above makes it clear that entrepreneurship in Indian population has its constraints because of inequality. Everybody can not venture to start his enterprise even if he/she is capable with his/her abilities. Inequality in income, minus the large number of able entrepreneurs to contribute for the development of the country and welfare of society. The entrepreneur is mainly interested in securing his interest and protect himself from any financial risk, where regular sale of his product is the most crucial factor. But the low effective demand discourages new entrepreneurs. Number of times the concessions for the foreign investment are announced, but it had been observed that the response of the foreign investors is dismal only because of the low demand for number of products which are beyond the purchasing power of the large number of consumers of the country. 

As inequality of income hampers the employment opportunities it generates the number of social problems also like drug addiction, child labour, exploitation of women, cheating and theft and snatching. All such evils are stalemates in the interest of the new entrepreneurs. Child labour is a big menace in the country. There are about 30 million child labourers and the number is further thriving. Unemployment , poverty, debt, illness of the parents are the causes for this menace. Thus, child labour cannot be called employment, rather it is a crime. Nowhere in the developed countries such child labour is visible, as it’s due to equality in income. There is a need of statesmanship, to galvanise a proper economic system that may assure the alleviation of inequality. Only then will the other reforms follow automatically. Promises are only hollow. ---INFA 

(Copyright, India News & Feature Alliance)