Survival of the Richest: The India Story
A 2023 Oxfam report titled ‘Survival of the Richest: The India Story’ gives important statistical data that corroborates what we already know – inequality is increasing and state policy is only exacerbating this divide. Some key points are as follows:
I. Wealth Inequality:
a. The Rich are getting richer: The richest 1% of Indians own over 40% of total wealth in India, and the top 30% own over 90% of the total wealth. During the pandemic, Adani’s wealth increased 8 times. So too, the private healthcare and pharmaceutical sector, that is funded by Indian billionaires, greatly profited by the pandemic. The impact of this is that the profits are being distributed amongst the rich, and there is reduced spending in the public sector.
b. The Poor are Getting Poorer: The bottom 50% of Indian population have less than 3% of total wealth in India. Though government figures show reduction in poverty, the report reveals a real worsening of poverty in terms of ability of people to reach minimum required calories intake. A week loss of income would push the median population of India to the brink of starvation. An average of 115 daily wage workers died of suicide every day.
c. Other inequalities such as caste and gender increase wealth inequality: Inequality is also exacerbated by other triggers such as communities suffering systematic exclusion such as Scheduled Castes and Scheduled Tribes, who are often trapped in inter-generational poverty cycles. Women also face severe barriers, and a 2022 Oxfam report states that only 19% of employed women are in regular salaried jobs as compared to 60% of employed men. When double discrimination of community and gender is seen, there is a systematic increase in wealth inequality – for example, most manual scavengers in India are Dalit women. A revealing illustration is as follows: For each rupee earned by a male worker, a female worker earns 63 paise, for each rupee earned by a dominant caste worker, a Dalit worker earns 55 paise, and for each rupee earned by an urban worker, a rural worker earns 50 paise.
II. Taxation Policy of the Government
On one hand, by reducing corporate tax slabs and granting concessions to companies, the government lost revenue of 1.03 lakh crore in 2020-21, which is more than the total allocation for the entire MNREGA scheme. On the other hand, the Union government has placed heavy reliance on consumption taxes which increases inequality by shifting the burden of taxation from the corporate to the individual income taxpayer. Massive hikes in indirect taxes have resulted in disproportionate impact on the marginalised, who spend a far larger percentage of their income on food, goods and services. The increase of diesel and petrol prices by the government increased the financial burden of the average customer. The World bank found that the bottom 25% of Indians spent over 53% of earnings on food as opposed to less than 12% by the top 25%. As a result, the bottom 50% spend 6.7 percent of their income on taxes on food and other items as opposed to only 0.4% by the top 10%. Hence, while the top 10% contribute only 3-4% towards, GDP, the bottom 50% contribute almost 2/3rd. The impact of such a skewed taxation policy is only increasing inequality.
III. Impact of Inflation is disproportionate upon the poor
Massive inflation rates (especially in Rural India) that consistently breach the statutory limit of 6% have a disproportionate impact on the poor. This is because the marginalized have to spend more and more percentage of their income on essentials, which is not true for the rich. The report quotes a study of the Asian development Bank that posits that a 1% increase in inflation leads to a 0.5% increase in under nourishment and a 0.3% increase in infant and child mortality rates. As such, inflation results in the poor becoming poorer and the rich becoming richer. Hence, the general understanding that inflation is bad for all sections is untrue.
IV. Tax the Rich!
The report suggests progressive taxation, with higher taxes for the rich, and less for the poor; and with the revenue from such taxation being used to improve access to public services like health and education, while strengthening safety nets and bargaining power of the Indian labour force. Such a policy can go to significantly reduce inequality. The real import of such a policy would allow for funding of health and education of marginalized masses of the population. One example given was that a 5% tax on the the top 10 Indian billionaires would allow for all out of school children to be provided quality education.
While the Report fairly examines the state of wealth inequality in India and the state policy that only exacerbates this, the report fails to look at the capitalist underpinnings of such a policy. The recommendations of the report are not transformative, but seek imposition of regulatory policy to lessen this gap.
The Indian Constitution contains a Chapter on Directive Principles of State Policy [DPSPs], some Articles of which read as follows:
37. The provisions contained in this Part shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.
38. (1) The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life.
(2) The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities…
39. The State shall, in particular, direct its policy towards securing—
(a) that the citizens, men and women equally, have the right to an adequate means of livelihood; (b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;
(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment..
However, these principles are non-justiciable, or, they cannot be enforced by any court. Dr. BR Ambedkar spoke strongly in favour of the DPSPs remaining not enforceable. He said:
It is not a court that can enforce these provisions or rights. It is the public opinion and the strength of public opinion that is behind a demand that can enforce these provisions. Once in four years elections will take place, and then it is open to the electorate not to send the very same persons who are in different to public opinion. That is the real sanction, and not the sanction of any court of law.
Therefore, the justification for Ambedkar was that it was the executive and the legislatures that had to take the lead in the implementation of socio-economic principles, and not the courts.
When the policy of the Government so fully violates constitutional principles, Dr. Ambedkar might then state that it is time to change the government. While an important step, any lasting change, would structurally change systems of governance that stop enabling wage theft by the management of the surplus value of labour. The data in the report showing inequality that shocks the conscience must be weaponized to popularize the call towards the struggle for social, economic and political equality.