Pro-rich Policies Buoy Billionaires' Rise in India

• by Ranjit Devraj (new delhi)
• Wednesday, February 09, 2022
• Inter Press Service

“It is not widely understood but India does not have a working class — instead it has large labouring castes that are trapped in an inherently iniquitous system,” says Manas Ray, professor in cultural studies at the Centre for Studies in Social Sciences, Kolkata.

According to Ray, the labouring castes and their interests are poorly represented where it matters and they also have little guidance or support from voluntary agencies. “There’s no capable voluntary sector of the type that works to empower the marginalised in other countries in the region. In fact, hundreds of NGOs, including Amnesty International and Greenpeace, have been forced to shut down operations in India in recent years.”

“A contrasting situation can be seen in Bangladesh, where powerful NGOs reach down to people at the grassroots and guide them on how to generate and manage surpluses,” says Ray. “It helps immensely that Bangladesh is not burdened by a caste system.”

Last year, Bangladesh posted a per capita income of $2,227 or $280 higher than that of its larger neighbour. “Bangladesh, once regarded as a ‘basket case,’ can now be expected to maintain this lead in the foreseeable future because of investments in the social sectors, especially education and health,” says Ray.

In a global report released in January, the British charity Oxfam describes India as ‘very unequal,’ with the top 10 percent of its 1.4 billion population having cornered 77 percent of the total national wealth. The report, Inequality Kills, estimates that inequality has been rising over the last three decades.

Oxfam calculates that it would take 941 years for a minimum wage worker in rural India to earn what a top paid executive at a leading Indian garment company earns in a year. India’s stark wealth inequality is attributed by Oxfam to “an economic system rigged in favour of the super-rich over the poor and marginalised.”

The report said that during 2021, when the COVID-19 pandemic caused 84 percent of Indian households to suffer a drop in income, the number of billionaires in the country grew from 102 to 142. During the worst months of the pandemic (March 2020 to November 2021), the wealth of India’s billionaires more than doubled, from $313 billion to $719 billion.

“The pandemic proved to be a crunch point which exposed the country’s uncaringly iniquitous system,” says Ray, referring to how a suddenly imposed lockdown left millions of internal migrant workers stranded in the cities with no jobs, food or shelter and with little choice but to trek to their distant homes in the rural hinterland, often hundreds of kilometres away.

It took petitions in the Supreme Court for government to admit that more than half a million people were walking down the highways trying to get home, often braving assaults by police charged with enforcing lockdown rules. Trade unions said the bulk of an estimated 200 million migrant workers in India’s different cities and towns lost their jobs.

In contrast to the callous treatment meted out to internal migrant workers, the government spared no costs in arranging special flights to fetch students and privileged people who found themselves stuck in foreign countries that had also imposed lockdowns to stop the spread of the highly contagious COVID-19 virus.

The Supreme Court has had to intervene on behalf of the poor and marginalised on other occasions where inequity has been glaring. For example, the court stepped in to order the distribution to poor and starving people of vast quantities of surplus grain rotting in state-run godowns.

On 7 January the apex court dismissed petitions challenging the government policy of reserving a quota of coveted post-graduate seats in India’s medical colleges for socially backward castes on the plea that it went against the principle of merit. The court did not buy that argument and pointed to India’s iniquitous system, which it said impacts on merit.

“Widespread inequalities in the availability of and access to educational facilities will result in the deprivation of certain classes of people who would be unable to effectively compete in such a system,” said Y. Chandrachud, handing down the judgement. “Special provisions enable such disadvantaged classes to overcome the barriers they face in effectively competing with forward classes and thus ensuring substantive equality.”

“Merit should be socially contextualised and re-conceptualised as an instrument that advances social goods like equality that we, as a society, value,” Chandrachud said, pointing to provisions in India’s constitution to award reserved quotas in jobs and educational opportunities to “remedy the structural disadvantages that certain groups suffer.”

Reserved quotas have, however, barely scratched the problem. Since 1983, the government has implemented a policy of reserving 50 percent of jobs in the coveted civil service for socially under privileged castes, but by 2019 only four individuals from these categories had made it to a list of 89 secretary-level positions.

How may such ingrained inequities be remedied? The Oxfam report called for higher taxes to be imposed on the richest 10 percent of the Indian population to help fund measures to reduce inequality. That’s easier than done because only one percent of Indians declare earnings sufficient to attract taxation.

In 2021 only 50.89 million individuals in a population of 1.4 billion people filed income tax returns, and only half that number paid any worthwhile tax.

Prabhat Patnaik, former professor of economics at Jawaharlal Nehru University, New Delhi, agrees that that the solution to gross inequity lies in “taxing the rich and investing the proceeds for the neglected social sectors — it is shame that large numbers of people continue to have no access to health or education.”

The Oxfam report says that 63 million Indians are pushed into poverty each year because of unaffordable healthcare costs. Public spending on healthcare ranks among the lowest in the world — 1.8 percent of GDP in 2021. Although India is a major destination for medical tourism because of its fine specialty hospitals, several of its poorest states have infant mortality rates higher than those in sub-Saharan Africa.

Patnaik pointed to how government policies have consistently favoured the rich since the country embarked on economic liberalisation in the early 1980s. Inheritance tax was abolished in 1985 and in 2017 the government abolished wealth tax, allowing the concentration of wealth in rich families. In September 2019, corporate tax was slashed from 35 percent to 26 percent.

“In contrast to India’s policy of providing tax concessions to the rich the international trend is for the wealthy to ask that they be taxed more,” said Patnaik referring to the open letter from the Patriotic Millionaires group to the World Economic Forum’s virtual Davos in January asking to be taxed more to help economic recovery after the pandemic.

"As millionaires, we know that the current tax system is not fair. Most of us can say that while the world has gone through an immense amount of suffering in the last two years, we have actually seen our wealth rise during the pandemic — yet few if any of us can honestly say that we pay our fair share in taxes," reads the letter, which was prompted by the Oxfam report.

Predictably there were no Indians among the list of 102 Patriotic Millionaires and there has been no statement on it from any quarter in India.

© Inter Press Service (2022) — All Rights ReservedOriginal source: Inter Press Service

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