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New Age Policy

New Age Policy

While our financial year starts from April 1, people from the social sector look forward to certain reports that are published in the first month of the calendar year – one is published by Pratham and the other is published by Oxfam. There might be many other reports which are published but these two are worth reading.

The former points out the dismal state of education in India, largely the government schools, and the latter shows the increasing inequalities, the world over, including India. Incidentally, both the reports are published just before the Budget session, perhaps, thinking that these reports may influence the government in taking key decisions affecting billions of lives in the country. To our dismay, public expenditure on education or health or other public services has been reducing year after year. In other words, the reports seem to have little or no influence on the policy makers.

"Our economy is broken, with hundreds of millions of people living in extreme poverty while huge rewards go to those at the very top". This is how the Oxfam report titled “Public Good or Private Wealth?” begins. One may say, what is new in this. This is a known fact even to the poorest of the poor. 

Then the report speaks about a teacher who says she has seen some good children passing out from her school but they have little access to resources than the rich have in good schools. Hers is a government school. “Children in my school come from very poor families. Many walk a long distance, as there is no nearby school. Many come to school with an empty stomach, which is a challenge to learning. In our school, we have a problem of too few textbooks, dilapidated classroom blocks and teaching materials,” says Nellie Kumambala, a secondary school teacher from Lumbadzi, Malawi.

“I pay tax every month on the little salary that I get. I don’t understand why the people that have everything are failing to pay their taxes, to help fund development. With more money, a lot could be done at our school. We could provide students with breakfast. We could provide every student with textbooks. We could support them with the basic necessities like buying them school uniforms and other things like exercise books. At least this would give them a better chance in life. It would be wonderful if we were able to do this,” she laments.

While this may seem to be a usual story in India as well, what triggered headlines was the revelation that 26 billionaires hold as many assets as the 3.8 billion people, forming the poorest half of the world population. The number was 43 a year before. In India, nine billionaires are said to hold what the bottom 50 per cent of the population holds.

And there is no end to it. It says, “Between 2017 and 2018, a new billionaire was created in every two days across the world”. On the contrary, the wealth held by the poorest half of the world fell by 11 per cent during this period. Simply put, the gap is widening year on year. In India, the wealth of the bottom 50 per cent barely increased by 3 per cent. The rich 1 per cent was able to increase its wealth by 39 per cent in one year.

Not only this, the report mentions that India had 18 new billionaires in one year, increasing the number to 118. And the collective wealth these billionaires hold is higher than Rs. 24422 billion – the union budget for 2018-19!

And if we club the revenue and capital expenditure of the state governments and the union government under public health, water supply and sanitation, the amount still falls short of the wealth owned by India’s richest billionaire – Mukesh Ambani. His plush 570-feet house stands out, despite its weird architecture as many say. The house, which has a swimming pool, reportedly uses 5 lakh litres of water a month. And in the same city, people at times lose their lives as they fight for getting a small share of water!

The report tells exactly what Thomas Piketty in his book “Capitalism in the 21st Century” spoke about. He opined that 90 per cent of the wealth is concentrated in the hands of the top “decile” (top 10 per cent of the people in the world). While Piketty came out with taxation and banking system that was utopian and could exist in one’s dream of dreams, the OXFAM report, too, advocates taxing the wealthy and elimination of tax-avoidance.

It, however, does not speak about tax rates that should be levied to bring the wealthy and the poor at par with each other and how a more effective system could be evolved to stop tax avoidance.  It recommends introduction of inheritance tax as well. However, the researchers, perhaps, have undermined the fact that higher taxes essentially lead to people pushing wealth out of the country or under mattresses.

The report also relies on the UN declaration for sustainable development goals with a focus on goal No. 10 – reducing inequality and recommends that every country should set goals and targets to be achieved with specific timelines. But this is easier said than done. Similarly, it promotes universalisation of healthcare, education and other public services with no scope for their privatisation, something difficult to sell in a country like ours. But if Thailand can do it way back in 2002, why can’t we? All it needs is the political will.

It also speaks about gender bias and how almost each country is skewed towards women. Based on a report published by the UN, it says In India women get 34 per cent less in terms of money than men for the same work. The Indian story becomes more complicated as inequality is not just based on money or wealth but is also influenced by other factors like caste. For instance, life expectancy for a Dalit woman is 14.6 years less than that of a high caste, considering the fact that Dalits have been traditionally oppressed and suppressed in Indian society. They continue to face it even now in many corners of the country.

The health schemes, including Ayushman Bharat, do not cover outpatient expenses, which account for 68 per cent of the expenses. And not everyone is aware of how to avail of these benefits. It is an irony that we are ranked at the fifth position when it comes to medical tourism but stand at the 145th out of 195 countries when the parameter is provision of same health services to the common man. It shows the step-motherly treatment that the government gives to its residents while state-of-the-art services are given to those who come from foreign land and are in a position to pay.

The report also speaks about the high drop-out ratios for girls coming from the poor sections of society, studying in government schools in contrast with high retention and increase in admission in the private schools. Again, it speaks only about the half-hearted approach that the government has in building the education system.

The gap between the haves and the have-nots increases as the government spends too little on provision of public health and education. Hence the immediate recommendation for the government is to increase its expenditure on education and healthcare and bring it par with the global standard of 6 per cent and 3.5 per cent respectively.

However, considering the consistent drop over the last few years, it does not seem to have many takers unless the government harps on populism for winning elections and hits the second six out of the five left as mentioned by law minister Ravi Shankar Prasad, after announcement of 10 per cent quota on economic grounds.

While the report speaks a lot on inequalities, it has been criticised by many, especially on the methodology it has followed. Some are of the view that wealth should not be the index for calculation of inequalities as it excludes income. There are others, who accept the fact that inequalities persist but also have an opinion that the report may lead distorted policy formulation which may increase inequality, instead of reducing it.

Be that as it may, it has at least triggered the much-needed debate in the country – whether reservations and other social policies are doing the job that they are meant to. Are we actually promoting an inclusive society? Or, only a few are getting the benefits of economic growth? The government must look for answers to these questions before announcing the interim budget next month.

Public good or private wealth? Universal health, education and other public services reduce the gap between the rich and the poor and between women and men. Fairer taxation of the wealthiest can help pay for public services.

(The writer is a company secretary and can be reached at jassi.rai@gmail.com )

(Published on 28th January 2019, Volume XXXI, Issue 05)