BackIndia’s next big challenge: inequality
A Credit Suisse report recently revealed that the richest 1% Indians owned 53% of the country's wealth, while the share of the top 10% was 76.30%
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Last week, a report released by Credit Suisse revealed that the richest 1% Indians owned 53% of the country’s wealth, while the share of the top 10% was 76.30%. To put it differently, in a manner that conveys the political economy of this stunning statistic, 90% of India own less than a quarter of the country’s wealth.
If there were any doubts on whether India is up against the piquant challenge of growing inequality, they has been put to rest by the Credit Suisse report. It is not that there was no evidence of this pernicious trend previously. Just that it had never been so starkly spelt out.
The urgency is that much more, given that the trend in inequality has accelerated since the turn of the millennium. According to Credit Suisse, in 2000, the share of the richest 1% in national wealth was 36.80% and that of the top 10% was 65.9%.
They only confirm the findings of the 68th round of the survey conducted by the National Sample Survey Office in 2011-12. It showed that the monthly expenditure of the poorest 10% of the rural population rose by 11.5% in 2011-12 compared with the last survey (2009-10), while that of the richest 10% grew by 38% over the same period; in urban India, the growth was 17.2% and 30.5%, respectively, over the same period.
Anecdotally, it has been visible to us for a long time. Not just in the growing presence of luxury cars on Indian roads, but also the cheek-and-jowl manner of our urban living—wherein our building guard, who is inevitably a migrant worker, earns in a month as much as we spend on one meal in a restaurant (it was exactly this class division, worsened by rampant corruption in public office, that the Aam Aadmi Party, or AAP, exploited to inspire its unprecedented sweep of the Delhi assembly election last year).
But it is one thing to take advantage of growing inequality while in opposition and another thing to go about fixing the problem once in power. The problem with inequality in India is that it manifests itself in various forms. It is not just income inequality, but there is something equally attendant—inequality of opportunity.
And this manifests itself in myriad forms, defined by health, class, caste, religion and, of course, literacy. Affirmative action has not succeeded in correcting these imbalances. In fact, its failure is now inspiring a reaction that reservations should be done away with—the solution is to address why palliatives have not worked, not throw the baby out with the bathwater.
If the AAP reminded us in Delhi that class is an electoral issue, then Asaduddin Owaisi echoes it differently when it comes to how religion too is a social barrier. In a recent interview, he summed up his views: “Development indicators, whether it is economic, social or health, have gone from bad to worse (for Muslims). We have an opinion that this has a direct correlation with the political disempowerment of the biggest minority of the country."
The tragedy is that the political class is well aware of the problem, but has done precious little to address it. Three years ago, the parliamentary standing committee on finance in its 59th report—Current Economic Situation and Policy Options—criticized the growth strategy, claiming that far more people were being excluded and that the gains were accruing to only a few (exactly what Credit Suisse told us last week).
“In the context of the economic growth and per capita income, the committee is concerned to note the emerging ever-widening gap between the rich and poor and the increasingly disproportionate distribution of assets in our country. It is being observed that the purchasing power is getting concentrated in the hands of a few, whereas the majority is stuck below the expenditure curve," the parliamentary committee said.
This bipartisan consensus should logically have been used to push for policy solutions to the problem—however, the Congress-led United Progressive Alliance, the self-appointed vanguard of the disadvantaged, failed miserably even though it was in power till 2014.
The onus is now on the Bharatiya Janata Party-led National Democratic Alliance, which inherited political power at the centre. It has, over the last two budgets, taken initial steps towards creating a social safety net that could potentially go some distance to address part of the problem of inequality of opportunity.
Six decades of neglect can’t be righted overnight. Yet, the current political establishment does not have the luxury of time on its side—especially since aspirations, as every election since 2014 has revealed, cannot be suppressed any longer.
Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com
His Twitter handle is @capitalcalculus
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