A few weeks before Narendra Modi was sworn in as Prime Minister on May 26, 2014, Thomas Piketty’s trailblazing book ‘Capitalism in 21st Century’ came out. It evoked a debate, similar to the one Samuel P Huntington’s ‘The Clash of Civilisations And the Remaking of World Order’ caused when it was published in a book form in 1996.
I bought both the books as soon as they hit the stands. My son picked up Huntington’s book from my table and read it in one go. Luckily for him, he was asked about his reading habit during his interview for admission to St. Stephen’s College. He was asked to elaborate on the author’s thesis, which I would call flawed. The interview board realised that he had read the book and liked his presentation so much that one of them said that he would also get hold of the book and read it. To cut the story short, my son became a student of what was known as the Alexandria of the East. Economics is not my subject and I seldom read books on economics. My attempt to read Das Capital was a disaster, though I was attracted by the idea of a classless society in which each laboured according to his ability and each earned according to his needs.
Looking back, I take solace in what someone said that if a person was not a Communist in his youth and if he remained a Communist in his old age, there was certainly something wrong with him. Unlike Marx’s magnum opus, Piketty’s book was an easy read. It was devoid of economic jargons and explained economic theories in simple layman’s language. It provided an excellent recapitulation of the origin of inequality in wealth, its decline during the two world wars and its return thereafter. To quote my colleague Jaswant Kaur who wrote on it in the New Indian Express, the book was “as riveting as Jane Austen’s novels which the author often refers to for buttressing his argument”.
Piketty described how 90 per cent of the national wealth was concentrated in the hands of the top “decile” (top 10 per cent of the people) in some developed countries and the top “centile” (1 per cent) owned 50 per cent of the total wealth of the top “decile”. To put it in simple words, “Some individuals are as wealthy as the entire country”. Five years after the book came out, the situation has only worsened, even in India. Today Mukesh Ambani is richer than some of the small states in the Northeast. Kaur began her article describing his monstrous, 24-storied (equal to a normal 30-storied building) house, named Antilia, built on Wakf land, acquired through questionable means, in which his extraordinarily large family of a mother, Mukesh, his wife and two children manage to live with some difficulty.
They have, unfortunately, only one helicopter pad on the roof of their residential building. Their problem has worsened after the couple’s children got married and brought their spouses to live with them. They would have greater difficulty when they would have children of their own who would have to fight for their own space in the cramped house. Piketty was able to marshal a lot of facts, derived from a detailed study of the income tax returns filed by citizens in different countries, to come to his conclusion that wealth was getting concentrated in fewer and fewer hands. India was not an exception.
Let me quote Manas Chakravarty who writes in the Mint, “The richest 10 per cent of Indians own 77.4 per cent of the country’s wealth, says Credit Suisse in their 2018 Global Wealth Report. The bottom 60 per cent, the majority of the population, own 4.7 per cent. The richest 1 per cent own 51.5 per cent. And it’s not some bleeding-heart NGO that has arrived at these figures, but a blue-blooded Swiss bank”. Since Piketty’s book coincided with the arrival of Modi, the first Prime Minister born in Independent India, I thought he would take a leaf from the book to prepare his economic policies. I was disappointed when he chose a lawyer who can argue for or against depending on his client’s paying capacity as his finance minister.
Since Modi claims to come from the humble situation of a tea-seller, I hoped against hope that he would do something to close the growing gap between the rich and the poor. I lost hope when I saw a picture with Modi keeping both his hands on the shoulders of Mukesh Ambani and his wife, forming a semicircle. I am sure Jawaharlal Nehru or Sardar Patel or, for that matter, VP Singh would not have posed for a picture in such a manner with the industrialists of their time like JRD Tata or Dhirubhai Ambani. Nor would any of them have dropped Hindustan Aeronautics to accommodate Anil Ambani, who would have gone to jail but for his elder brother rescuing him at the eleventh hour, in the Rafale deal.
Small wonder that Mukesh Ambani had the guts to use Modi’s picture at the centre in the one-page advertisement he unleashed in all the major newspapers of the country to announce the launch of his telecom service provider Jio. True, he had to pay a fine of several thousands of rupees for misusing the PM’s picture for commercial purposes! In retrospect, Modi did not pay any attention to Piketty’s theory that there was a case for bridging the gap in the overall interest of the country. After all, he won the 2014 election on the slogan sabka saath, sabka vikas, or “all together, development for all”. Who benefited under his regime? The top 10 per cent or the bottom 60 per cent?
I am a student of literature, not economics. Piketty argues in his book that inequalities began growing in the 18th and 19th centuries. Where he does not have economic data to rely on, he turns to literature. Let me quote Jaswant Kaur again, “Novels at that time painted intricate contours of wealth and its implications. Their characters speak about the social predicament of the people, their lifestyle and thought process.
“One such character is Eugene de Rastignac in Balzac’s ‘Pere Goriot’ who takes no time in marrying an ugly woman from an affluent family, as it promised him a bright future. Though projected as a very ambitious man initially, Rastignac preferred to attain wealth through a much simpler way, rather than working hard, earning money and saving it for future”.
I found Piketty’s technique quite appealing. The novels of Thakazhy and P Kesav Dev provide a better picture of the socio-economic condition of the average Malayali in the second half of the 20th century than any economic study. Similarly, Phanishwarnath Renu’s novels like ‘Mailanchal’ and stories like ‘Panchlight’ provide a glimpse into the lifestyle of the people of Araria in Bihar during the same period. Piketty argues for higher taxation to bridge economic disparity. When a poor man starts a teashop to make a living, he cannot be sure that he would succeed. There is every chance that he would fail. What will happen if he fails? Everyone would call him a failed shopkeeper. He will have to look for another source of livelihood. Or, in an extreme case, take his own life.
More businesses fail than succeed. Jet Airways was a big success. God knows what role it played in the killing of the owner of East-West Airlines, the first to enjoy the open skies, and the closure of the airline soon thereafter. Be that as it may, when Jet Airways faced closure, a consortium of banks came forward to keep the airline afloat. If the airline goes down despite the infusion of public money, who will be the ultimate sufferer? It is the taxpayer. Nirav Modi was detected and interviewed by a senior journalist in London, leading to his unexpected arrest. He was found wearing a fashionable jacket made of ostrich skin worth Rs 1.5 million. He could afford the garment as he could cheat so many banks of billions of rupees. Let it be underlined, in India every big businessman does business with public money. They make their money cheating the government. The Congress had its favourites during its time, so had even the BSP of Mayawati. Now that the BJP is in power, it has several fair-weather friends among businessmen. That is how crony capitalism thrives.
Over the decades, the state has written off trillions of rupees declared as bad debts in books of account. Only a fraction of it benefited the poor farmers. The rest was cornered by the likes of Vijay Mallya and Nirav Modi. It is against this backdrop that Congress president Rahul Gandhi’s promise of a minimum income scheme, Nyuntam Aay Yojana (NYAY) should be seen and judged. "There is no doubt that poverty can get eradicated over time if the economy grows at a healthy pace of 9-10 per cent a year, and economic policies are geared towards creating jobs. However, considering the crisis of rising expectations manifest in rural distress and unrest among sections of society, India can’t afford to depend on a ‘trickle-down effect’. It must do something radical".
Gandhi seems to have drawn his idea from the likes of Piketty and Amartya Sen. They are not the only ones to plead for higher taxation. One of the richest persons of the world, Warren Buffet, is also for introducing higher rates of taxation for the rich, the richer and the richest. In simple terms, what Gandhi promises is Rs 6,000 per month. Under the Nyay scheme, the Congress government would provide Rs 72,000 per annum to 20 per cent poorest families in the country. The scheme will benefit 5 crore families and 25 crore individuals directly.
"Guaranteeing a minimum income of Rs 72,000 to Indian households would cost Rs. 2.9 trillion, i.e., about 1.3 per cent of the GDP in 2020, the World Inequality Lap said in its report. "There are several options to finance an increase in social transfers. The best way to do so in order to tackle rising inequality at the top of the distribution is to implement progressive taxes on income and wealth. Under simple assumptions, we find that a 2 per cent tax on total wealth on households owning more than Rs 2.5 crore (that is the top 0.1 per cent of households), would yield Rs. 2.3 trillion or 1.1 per cent of the GDP”. This tax, the organisation said, would not concern 99 per cent households in India".
In short, it is not an impossible proposition. When the National Job Guarantee Scheme was introduced by the first UPA government, many had criticised it for squandering public money. It was mainly the idea of persons like Amartya Sen and Jean Dreze. I still remember the discussions the Kolkata Group -- set up by Sen with members like Sitaram Yechury, Kapil Sibal and Sharmila Chatterjee -- had on the scheme and the Group urging the Centre to implement it in right earnest. Yes, there was some pilferage but the scheme also created infrastructures like roads, wells and ponds.
Man needs food every day of the year. The job scheme guaranteed jobs for only 100 days a year. Its popularity was enough to bring the UPA back to power with a greater vote share and independence from the likes of Sitaram Yechury who claimed that Prime Minister Manmohan Singh stood up when he asked him to do so and sat down only with his permission. It may be a coincidence that the last major book that Amartya Sen authored was The Idea of Justice. It discusses different kinds of Nyaya like the Matsya Nyay under which the bigger fish swallowed the smaller fish.
In a democracy, Nyay (Justice) can be ensured only when the nation’s growth benefits the poorest of the poor. If the state has to pay Rs 6,000 to such households a month to lift them out of poverty, so be it. A happy nation, at peace with itself, is better than the one that throws a missile at its own property in the outer space with nobody knowing whether it hit the target or not. One hopes that Gandhi’s promise is not like Modi’s promise of depositing Rs 15 lakh in every citizen’s bank account from the money he would ferret out from banks in Switzerland and elsewhere. Just as the taste of the pudding is in the eating, NYAY will be judged on how it is implemented.(Published on 1st April 2019, Volume XXXI, Issue 14)