- The Oxfam Report
Oxfam released a report just before the commencement of the World Economic Forum in Davos, which indicates that wealth inequality within India has skyrocketed over the previous decade. For instance, in 2017 alone, the top 1% of the population within India attained 73% of the total wealth that was created within the country. Within the country, the top 1% owns 58% of the total wealth, and this is predicted to continue to increase in the upcoming years.
This data, that has been provided by Oxfam, is also supported by the findings of other economic agencies. Thomas Piketty and Lucas Chancel contend that economic inequality is now higher than any point since the introduction of income tax within India in 1922.
2. The Anti-Neo-Liberal Thesis
Perhaps some may argue that the neo-liberal economic framework that India has ascribed to, for quite some time, has produced such worrisome data. I will now outline the theoretical basis for this argument: the ratio of income saved is higher for upper-income groups, as they earn more which lifts the amount of wealth that is concentrated towards the wealthy. Moreover, the removal of state protections for agriculture leads to urban consolidation at a time, when technological change is occurring at such a fast pace. As a result, the rate of employment cannot properly absorb the ongoing growth of people who wish to enter the workforce. This, in turn, causes the overall wage rate to be commensurately low, even as labour productivity increases. Those who benefit from the surplus of such products are often the professional class, and they face no net reduction in non-wage income.
These anti-neo-liberal proponents such as Prabhat Patnaik seem to extend their argument even further when it comes to the issues that are occurring in India. In general, there has been extensive privatization of key services, a stock market boom and tax concessions for the mega-rich and big corporations. As such, the argument often is as follows: the migration of low-wage workers from agricultural-based areas leads to a loss of assets, as they are forced to sell their houses for low prices. A similar circumstance may arise when a public agency takes property or land for public benefit – known as eminent domain in the United States – for the administration of infrastructure or development projects that are often closely commensurate with the demands of the real estate market; leading to the further digression of wealth towards the ‘elite’ class. When key services such as education and healthcare are privatized, they become more expensive for low-income groups, which add more pressure on their capacity to save and invest their money. Asset market bubbles also lift the concentration of wealth among those in higher income brackets. In response, governments are sometimes advised to transfer the capital gains from such bubbles into real assets. They may achieve this aim by selling assets such as natural resources and those within the domain of the public sector.
- My Opinion to Resolve the Aforementioned Issues
I do not entirely agree with the above argument, as in my opinion, India should take a balanced approach to the resolution of these issues. There is no doubt that the expansion of market growth and opportunity will lead to benefits for the Indian population. Their economy is predicted to grow by 7.4% in 2018, which may result in having the world’s fastest-growing economy. India’s most successful economies will grow at a rate of 30% per year according to the McKinsey Global Institute. Moreover, the middle class in India is predicted to continue to spend more on consumer goods and urbanization, which will increase the growth in some areas. Nevertheless, the government should seek to ensure those that are struggling are not subjected to adverse practices as a result. Public policy agencies should examine whether opportunities that are presented by economic growth are accessible to all Indian citizens or not.
Presently, there are suicides in agricultural areas, mass hunger and extensive unemployment within India. There is also a high rate of pollution, whereby doctors claim that breathing the air in Delhi is equal to smoking 50 cigarettes per day. In addressing this issue, India should continue to reduce its construction of new coal-fired power plants and invest in renewable energy in a similar way to China.
India is ranked the 62 out of 74 emerging economies in terms of inclusive economic development. While there has been a reduction in poverty, six out of ten Indians live on less than $3.20 per day. India may seek to tackle the problem of unemployment, as only half of the secondary age children are attendees in secondary school and half of the graduates often are unable to find work. In order to limit constraints on public expenditure, governments and microfinance entities could inject money into the highly underfunded and under-resourced community-based private school system, which is quite preponderant in India, as well as the public school system.
Lastly, India should examine its response to the gender gap in labour force participation rates, where its ranking is 136 out of 144 countries according to the Inclusive Development Index of 2018, published by the World Economic Forum. India may tackle this problem by maintaining its present high enrolment of women in primary and secondary education while also re-evaluating its approach to gender equality practices within the business sector. If India can meet these aforementioned challenges, then I predict it will enter a solid and prosperous period of economic opportunity that will continue into the forthcoming decades.
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