Daily News and Analysis (Mumbai), February 6, 2014

by Praful Bidwai A vitally important issue that has altogether fallen off India’s economic-political discourse is growing economic inequality. In part, this is because of the continuing hangover of the euphoria generated by economic liberalisation, and the growth of social-Darwinist ideas and moral indifference towards the poor within our burgeoning middle class. In part, this also reflects India’s Rightward political drift, and the declining ideological-political influence of the Left and its own retreat from egalitarianism. The deplorably mindless neo-liberal consensus that exists within the bulk of our political class, duly reflected in the media, inures us to growing disparities.

So the Organisation for Economic Cooperation and Development (the rich nations’ club) and the International Monetary Fund (of all institutions!) have to remind us of the explosive growth of income and wealth inequalities since neo-liberal policies were launched 23 years ago. The OECD recently said: “Inequality in earnings has doubled in India over the last two decades, making it the worst performer on this count of all emerging economies. The top 10 per cent of India’s wage earners now make 12 times more than the bottom 10 per cent, up from a ratio of six in the early 1990s.”

And the IMF’s Christiane Lagarde has just said: “In India, the net worth of the billionaire community increased 12-fold in 15 years, enough to eliminate absolute poverty in this country twice over”.

These reports should deeply shame us. India’s own National Sample Survey figures on disparities in per-capita consumption expenditure also tell a sordid story through the Gini coefficient. (This ranges from zero to one: zero represents perfect equality and one total inequality.) Between 2004-05 and 2011-12, the coefficient rose in urban areas from 0.35 to an all-time high of 0.37. And in rural areas, it increased from 0.26 to 0.28 — the first rise in almost 35 years.

Regional disparities have also skyrocketed. The per-capita expenditure gap between rural and urban areas jumped from 63 per cent in 1993-94 to 84 per cent in 2011-12. The gap between villages in the richest and poorest states increased from 35 to 68 per cent, and that between their urban citizens rose from 36 to 45 per cent.

These obscene class and regional inequalities result from a severely skewed distribution of assets, including land and capital, access to education, coupled with growth imbalances, painfully slow job creation and worsening income distribution which favours the rich. The top 10 per cent of India’s wage-earners make almost five times more than the median 10 per cent but this median makes just 40 per cent more than the bottom tenth.

India is becoming an increasingly inequitable, “rich-take-all”, pathological, society marked by exclusion and immobility, where an individual’s circumstances of birth, and class and caste privileges, matter more than his/her effort. This has grave consequences for democracy. Without inclusiveness and a degree of social cohesion — or at least the prospect of cohesion — democracy becomes merely procedural, formal and hollow. It’s only when all citizens acquire an equal sense of ownership in a collective national project that a substantive, healthy democracy flourishes.

An economy of exclusion criminally wastes precious human potential. Rising inequalities eventually harm the quality, pace and sustainability of growth itself. If India is to achieve genuine progress rather than growth, it will have to radically redistribute assets, institute land reforms, and provide good-quality health care, education, food security and social protection to all. We must raise wages, further tax the rich, and impose ceilings on profits and executive incomes. This means embracing a new anti-neoliberal policy paradigm.

The author is a writer, columnist, and a professor at the Council for Social Development, Delhi