Over the last few weekends, Paris has been hit by violent protests. The protestors, identified as the gilets jaunes or yellow shirts they wear, are articulating their anger against growing inequality—a return to class struggle. This weekend, the clashes forced the postponement of several football league matches in a country in which soccer is the national passion; worse, similar protests reverberated across Lyon, Bordeaux, Toulouse, Marseille and Grenoble, and the news on Sunday was that copycat protests have erupted in other European cities too.

If anything, class struggle is finding traction even as the backlash against globalisation gains momentum across the world. Identified as the 1% problem long ago and given a fresh lease recently through the contributions of the French economist Thomas Piketty, it has been largely ignored even as the immiserisation of the bottom 20% of the population has worsened even as the top percentile grows wealthier. It would be a mistake to assume that the violent protests in the last few weeks is a problem only afflicting France.

Inequality is the new lifestyle disease associated with globalisation, which like terrorism, does not recognise geographical boundaries. India too—where policy planners have not formally acknowledged inequality, but have persisted with the cure: inclusion—is in the throes of worsening inequality.

Either by design or coincidence, the rapid decline in poverty levels over the last decade, now down to about a fifth, is lulling us into believing that the visible material trading up in India since the turn of the millennium is happening equitably. The political economy of formally acknowledging inequality is that it will require a big reset of public policy and also provide fresh wind to simmering protest movements across the country.

Regardless, growing inequality is a fact. A report released by Oxfam, a non-profit, earlier this year is very revealing. India’s top 10% of population holds 73% of the wealth. Four out of ten Indian billionaires have inherited their wealth; and rent-thick (based on access to natural resources) billionaires account for 43% of all billionaires.

The report then goes to make a damaging conclusion: “Clearly, the wealthiest in India have made their fortunes from crony capitalism, rather than through innovation or the rules of the market."

The problem has been that pressure of globalisation has been on productivity and bottom-line monitoring. This has meant that the structure of the workforce has shifted from the formal to the informal. The attendant consequences, primarily the loss of social security benefits that come with a formal job, has only contributed in accelerating the trends in inequality.

The consequences of growing inequality are obvious. For one, the economic growth is not sustainable if the gains from it are not spread around; it will manifest in macroeconomic terms in lack of demand.

Second, the problem for a developing country like India is that inequality manifests in means other than just income and wealth disparities. It will influence access to public services like health, education and so on; which in turn only reinforces the inequalities. It is worse when we take into account the disenfranchisement caused by social distinctions forced upon us on the basis of caste and religious denomination.

To its credit, both the previous Congress-led United Progressive Alliance (UPA) and the ruling Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA), while officially never acknowledging the problem of inequality, have sought to undertake a redistributive exercise to presumably correct for this imbalance in income distribution. While the UPA pursued an entitlement regime—defined best by the rural employment guarantee scheme— the NDA has preferred a mix of entitlement (continuing the rural employment scheme and launching a health insurance together with electricity, housing and banking for all) and empowerment schemes, by creating a ecosystem, including easier access to credit under the Mudra scheme, to promote self-employment.

The problem is that while this approach is well-intended, it is not sufficient. At the least, the problem of inequality needs to be officially acknowledged. The solution has to enjoy political consensus—something so difficult to imagine at the moment given the deep political divide—and therefore a discussion in Parliament is an imperative. Given India’s never ending obsession with the electoral cycle, time may not be to its disadvantage. At the same time, the risks of ignoring the problem are obvious. The choice is before us.

Anil Padmanabhan is executive editor of Mint and writes every week on the intersection of politics and economics. His Twitter handle is @capitalcalculus.

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