The latest Oxfam study on inequality in wealth accumulation in India has posed a question mark on the economic policies of the NDA government. The international rights group said in its annual study released before the start of the five-day World Economic Forum (WEF) Annual Meeting in Davos (Switzerland) on Jan 21. Indian billionaires have seen their fortunes swell by Rs. 2,200 crore a day last year, with the top 1% of the country's richest getting richer by 39% as against just 3% increase in wealth for the bottom-half of the population.
Oxfam International Executive Director Winnie Byanyima described it as "morally outrageous" that a few wealthy individuals are amassing a growing share of India's wealth, while the poor are struggling to eat their next meal or pay for their child’s medicines.
Anju Grover for Indian Currents spoke to renowned economist Professor Prabhat Patnaik from the prestigious Jawaharlal Nehru University to understand the meaning of the study, its consequences and remedial measures.
Professor Patnaik said the findings of the study were the outcome of neo- liberal economic policies of the governments in power for the last 28 years. He said the growing income inequality is counterpart of the GDP growth rate.
IC: The latest Oxfam study on annual wealth inequality which said that the poor have become even poorer in the last year and the rich got even richer. Wealth inequality is growing fast. Your views.
Prabhat Patnaik: It is a phenomenon of neo liberalism. The idea to have a high growth rate by providing incentives to the capitalists for making investments leads to greater wealth inequality and increase poverty in the country.
IC: The disparity in wealth accumulation is nothing but a reflection on the economic policies of the NDA government which has been ruling the country for the last four and a half years. Your views.
It is not confined to the NDA government. It has been happening for quite some time. The NDA government has carried these policies without alterations and consequently the tendency towards wealth inequality persisted. The tendency got stronger in the NDA period because of various other additional crony capital measures.
IC: Few economists said that the accumulation of wealth in one segment of the population is a natural course of progress in any developing society. This segment will create a strong entrepreneurial class that will create jobs for the other half and lead the society to prosperity in due course. Do you support this viewpoint?
It is not true. Our experience contradicts this viewpoint. . An increase in GDP growth rate is associated with reduction in employment growth rate. Growing income inequality is counterpart of the GDP growth rate. This has been happening for the last 28 years and what has happened to the rate of growth and employment. Prior to economic liberalisation, the GDP growth rate was lower like 3-4% per annum and the employment growth rate was around 2% per annum. Now the GDP growth rate is around 8% per annum but employment growth rate is 1% per annum.
IC: Is it not alarming that a handful of people are billionaires and majority find it difficult to earn their living?
Yes. The situation is alarming because of several reasons. One reason is absence of wealth tax. Also, enormous inequality in wealth can harm the democracy as democracy is based on the notion of equality.
IC: On health front, infant mortality rate is higher than those in sub-Sahara region. The study is critical for NDA government which has launched a slew of pro-poor schemes. For instance, Ayushman Bharat scheme that promised 5 lakh medical insurance to poor families is yet to reach people. The study points out that the gap between the rich and poor is widening and hence, poor won't be able to get health services.
The NDA government's schemes which have been launched in the last four and a half years, are much more hype than reality. It is a well-known phenomenon that any insurance route for providing health care to the people, is a suspect route anyway. The National Health Service can address this problem.
IC: Health care and education are underfunded public services while action against tax evaders like Mallaya and Nirav Modi is full of loopholes. Is there any way to cure rising income or wealth inequality ?
Definitely, measures like introduction of wealth tax, allocation of 3% of GDP growth rate on health care and 6% on education. Services like private health care and private education cannot help the poor.
IC: In India, one of the major problems is unemployment crisis. According to centre for monitoring Indian economy, India lost 1.1 crore or 11 million jobs in 2018.
Indian economy is facing recession. World economic conditions are badly affecting Indian economy. As a result of it, sectors like IT are not doing well; so there are not many jobs as used to be earlier. Rural economy is in complete distress due to which job creation has come down heavily. The programme like MNREGA is one example.
IC: India is facing agrarian crisis as several farmers committed suicide in Marathwada region. In recent past, thousands of farmers had tried to reach Delhi demanding held a mega march to protest against, in what they have termed, the Centre's "failure" to address their issues. Is it not a warning signal of growing unrest among the people?
The present unrest is very serious. It can have serious repercussions in future.
IC: Political parties are big beneficiaries of wealth accumulation. So nothing will be done to fill the gap between rich and poor. Your views.
It is wrong to blame the political parties for inequality in wealth accumulation. The onus lies on the people to raise their voices against it, forcing political parties to take concrete steps. The intelligensia has a role to play in it. That is what democracy is all about.
(Published on 28th January 2019, Volume XXXI, Issue 05)