Excessive focus on poverty elimination has made policymakers overlook the innate discrepancies in the economy
Published Date – 31 March 2024, 11:59 PM
By Samudrala VK
The depressing revelation by World Inequality Lab in its recent report stating that the income inequality in present day India is higher than that of during the British Raj or colonial epoch casts a gloomy picture of the state of the economy as a whole. Though the outlook of the report is not a shocking one going by the steps the Indian economy has adopted in its post-independent and post-reform periods, it is wise to take a cue from the report.
The report has rightly suggested that the top 1% of the economic ladder should be levied an additional 2 per cent in the form of a ‘Super Tax’. However, it is also important to look at the other side of India’s economic story.
Ever since India became an independent nation, policymakers have ignored the values and principles on which the freedom struggle was based. This tendency has aggravated in the post-reform age. Though values like self-respect and self-rule infused vibrancy into the freedom struggle, it was the economic front that formed the bedrock of this movement. Plunder of resources, economic inequalities, exploitation, famines and so forth forced the then intelligentsia to realise the need for independence. To say, it is upon the sweat and blood of India’s working class that the British Empire was built.
Access to Power
While the shift from feudal to modern capitalist to neo-liberal state in the Western world took over five centuries, the economic transition in India’s case happened just in a century. It is this sudden and radical shift that left the traces of yester economic systems in the subsequent stages of the economic evolution of the nation. The class that had access to power and economic resources in pre-British India and British India gradually metamorphosed into modern India’s bourgeoisie class thereby becoming the epicentre of political power in post-independent India.
Economic equality has never been on the minds of economists and policymakers. Excessive focus on poverty elimination made them overlook the innate discrepancies and distortions in the economy. As a result, the factors that contribute to economic inequality remain unaddressed. They have also failed to understand the wafer-thin difference between poverty and economic inequality.
Business-friendly State
Paltry implementation of land reforms, corporate-friendly policies under the guise of liberalisation, gradual withdrawal from social security measures under the token of governance and facilitation, destruction under the banner of development, crony-capitalist measures and tax cuts, and special incentives to industrialists in the name of business-friendly state have taken a toll on the economic health of the nation. It is worth mentioning that the trickledown theory propounded by capitalist economists is a pure humbug and hoax.
Excessive emphasis on economic growth numbers instead of overall progress, ruthless focus on competition rather than cooperation, and encouraging private investments rather than public ones have created an environment of rugged liberalism. Governments since the 1990s have been boasting their pro-capitalist policies and achievements rather than expressing a sense of remorse and adopting corrective measures. Moreover, the derailment of India’s economy from its socialist footings has made it highly vulnerable to the external shocks of the global economy.
The neo-liberal perception that higher taxes on wealth creators or the top brass of the economic ladder would be detrimental to economic progress has proven to be a pure lie. It is worth mentioning here that globalisation, what has been hailed as a panacea for all economic problems by the neo-liberal states, has benefitted their corporate cronies rather than the common man. In fact, it has hastened the process of the wealth concentration. The unhindered access to the markets across the globe is putting the sanctity of the modern state into question.
Tweaked Model
Ever since the advent of the neo-liberal state, environmental laws, labour laws and social and economic security measures have taken a back seat. They are being tweaked and codified to the benefit of the business class. Contractual and outsourcing employment systems have been contributing to the economic insecurity of the working class. Additionally, the psychological and cultural hegemony of neo-liberal economics has been depriving the masses of their economic and political rights. The prevailing economic discourse which solely rests on consumption and growth indices fails to recognise the debt that is hanging as an albatross around the common man’s neck. If one goes by the debt, it is easy to say that more than 80% of the global population is caught in modern-age poverty. At a time when education and health expenses are squeezing the major chunk of the common man’s income, it is important on the part of the state to bring them under public control. While both these are being viewed as important drivers that can push the poor out of the quagmire of poverty, contrarily, the expenses on both are obstructing the same in climbing up the economic and social ladder.
New Imperial Regime
It is also important to realise that seamless transnational economic flow is skewed towards the business class. The unregulated economic activity in the present-day world appears as an imperial regime of corporates, albeit without colonies. India with its huge market size and demographic advantage seems to be a lucrative destination for corporates across the world.
Coincidentally, the World Happiness Report released by the United Nations a couple of days ago positioned India at 126 out of 146 countries. Though the report excludes variables like unemployment and inequality in evaluating the index, it is important to note that the countries with higher economic equality occupied the top rankings. The higher the inequality in a nation, the higher the dissatisfaction among its citizens. All in all, the growing income inequality in the country calls for immediate action in the interest of its economic well-being in the long run.
(The author is Director, Samudrala VK IAS Academy)
