Increasing inequality due to uneven distribution of wealth

Economic equality plays a major role in ensuring that marginalized communities have equal opportunities and greater representation. Economic inequality can destabilize an economy.

Economic inequality in India has widened, with the richest 1 percent of the country owning 22 percent of the total national income, while the top 10 percent own 57 percent of the national income. Half of the population of our country is earning only 13.1 percent. It is more necessary to discuss the situation of poverty and lack of resources as half of the population.

Economic equality is an important means of realizing the concept of equality in our constitutional democracy. Economic equality plays a major role in ensuring that marginalized communities have equal opportunities and greater representation. Economic inequality can destabilize an economy. Therefore, investment in essential sectors like health, education, and research is likely to decrease.

Recent studies have shown that falling wages and incomes during the Corona period have adversely affected aggregate demand as consumption by the general public has decreased.

Widening economic inequality in India

The widening gap in wealth between the rich and the poor has not only worried the world’s economists but also sociologists. Concern over this growing economic disparity has now become a major challenge. Economists have warned that if it is not resolved quickly, there is a risk of disintegration of the social order.

The fact that rising unemployment among the young generation and its struggle to survive could lead to new chaos in the world.

The rich are terrified. Today, the wealth accumulated by just 10 rich people exceeds the wealth of the world’s 350 million people, or half of the world’s population. The number of billionaires in India has increased tenfold in the last decade.

A third of the world was rich are in the same country, where about 50 crores are unable to meet their daily needs. Currently, there are 111 trillionaires and over four lakh billionaires in India.

Ray Dalio, Klaus Schwab, and Mark Cuban don’t think of donating to the world’s poor. History has taught them that this situation can turn people’s discontent into anger, and that is why these billionaires have to worry. Ancient Socio-Economic History Prof. Walter Snidel argues that once inequality reaches explosive levels, it is the government’s responsibility to protect the interests of the rich.

This naturally results in the oppression of the poor. According to Snidel, history has seen this inequality only erased by epidemics, wars, government collapses, or revolutions.

Economic policies and their role in exacerbating inequality

Economic policies of liberalization and globalization led to a massive expansion of capital wealth in the world after 1990, and notably, the largest share of this capital growth was concentrated in the hands of a few.

Only 10 trillion own more than half of the world’s wealth and it is no accident that policies have been designed to benefit these trillionaires and even developing countries like India have been forced to follow suit.

For this purpose, the first GATE agreement (General Agreement on Tariff and Trade) was made to create new rules for mutual trade between different countries. Then on that basis, the World Trade Organization (WTO) was established in 1994-95.

Many new laws were enacted, aimed at increasing the wealth and profit of the capitalists in every situation, leading to a great increase in economic inequality.

Klaus Schwab, the founder-president of the World Economic Organization, has also warned that if this inequality is not reduced, the existence of society will be at risk.

Christine Lagarde, the former managing director of the International Monetary Fund, has also said that ‘in most countries, very few people are benefiting from economic progress, but this situation cannot last long in terms of stability and harmony in society.

Yong Kim, who is the president of the World Bank, cautioned, “Failure to address growing inequality is a social chaos that could explode at any moment.”

The Warnings of global leaders on Inequality

India is one of the most unequal countries in the world with only one percent owning wealth worth 55 lakh crores. In 2017-18, 7,300 new people joined the billionaire community, taking the number of large capitalists to over 350,000. The total wealth of these people has reached 7.7 trillion.

On the other hand, the average wealth of an adult in the country is around Rs 5 lakh 15 thousand, while the average wealth of each adult in China is Rs 35 lakh. Capital wealth in the country has increased rapidly, but the majority of the population is deprived.

The facts show that 91 percent of the total wealth of people today has less than 7.35 lakhs, while the average position of 0.6 percent is 73.50 lakhs or more. Industrially developed Japan has the lowest inequality in the world. And in India, 55 percent of the country’s capital is held by one percent, and 68.6 percent is held by five percent. Inequality of distribution alone cannot be held responsible for economic inequality.

Social evils such as the caste system and untouchability and caste discrimination in the labor market play a major role in depriving Dalits of land and property and not remunerating their labor.

Between 2015 and 2017 Savitribai Phule University Pune, Jawaharlal Nehru University, and after a study conducted by the university and the Indian Institute of Dalit Studies involving 110,800 families in 20 states, the researchers concluded that 22.3 percent of upper-caste Hindus own 41 percent of the country’s wealth.

7.8 percent of the Scheduled Tribe population owns only 3.7 percent of the property. Hindu Scheduled Castes own only 7.6 percent of the property.

Gender Inequality and Declining Women’s Participation in the Indian Labor Market

The situation of gender inequality is also very dire and globally, India does not fare very well in terms of women’s participation in the labor market. According to the Periodic Labor Force Survey 2018-19, there has been a sharp decline in the participation of women in the workplace.

During 2011-19, women’s participation in the rural workplace declined from 35.8% to 26.4%. Women are burdened with household work for which there is no provision of remuneration.

Women’s wages are much lower than men’s. Gender discrimination in the labor market is so great that many jobs and professions are reserved for men. Despite all legal provisions and social awareness campaigns, women are denied property and land rights.

Women account for 18 to 19 percent of our total paid work in urban and rural areas. A woman earns only 62.5 percent of what her male counterpart earns. On the other hand, the tribal community is most affected by industrial development. It suffers from displacement and has to leave its traditional occupation. Obviously, the income and living standards of tribal groups are declining.

The discussion of economic inequality was already fraught with complications due to the inherent anomalies in Indian society. Meanwhile, the rise of neoliberalism and globalization led to economic policies in which inequality was an inevitability of the development process.

Figures from the World Inequality Report over the past few years have shown that the wealth of the top 1 percent of the population has been growing exponentially. Neoliberal policies have increased economic disparity between cities.

Economic disparities between villages and cities have widened, resulting in wide differences in the scale and nature of development between different regions.

The Impact of the Caste System on Wealth Distribution in India

Many economists had hoped that modern concepts like neo-liberalism and globalization would help eliminate caste and gender disparities in the Indian socio-economic system, but this did not happen.

Industrial organizations and multinational companies always require trained, efficient, skilled, and best-performing employees and workers from whom maximum profit can be earned by doing maximum work.

The private sector argues that the socio-economically-educationally backward classes (Dalits-Tribals-Women) obviously lack such qualified workers, so they do not get opportunities in the private sector. There is a strong system of reservation in government jobs, but not so in the private sector. This is why the share of disadvantaged communities in the new jobs created after corporate dominance in the economy is negligible.

In 2006, the UPA government set up a committee to ensure affirmative action for Scheduled Castes and Scheduled Tribes. The committee was set up. Its aim was to give representation to these classes in private-sector jobs. Not much has happened in this direction for nearly a decade. Prime Minister Narendra Modi held a meeting in this regard in September 2018 in view of the growing discontent among these classes.

In this, the statistics provided by various industrial associations present a dismal situation. Of the 17,788 companies affiliated with these associations, only 19 percent favored reservation for SCs in the private sector.

It is surprising that the private sector is generous in providing vocational training and scholarships to SC and ST students, but reticent in providing employment to them. FICCI, CII, and ASSOCHAM imparted vocational training to 277421, 320188, and 36148 people respectively from this community, while the number of scholarship recipients from these institutions was 3118, 159748, and 3500 respectively.

But the number of SC/ST people in CII and FICCI is only one lakh. According to Azim Premji University’s State of Working India report, SCs, and STs are proportionally overrepresented in low-wage jobs, while it is almost negligible in high-wage jobs.

Addressing Inequality in India Through Skill Development and Tax Reform

A large section of economists believe that the benefits of liberalization and globalization can accrue to our workers only if their skills are improved but at least the private sector cannot be expected to upskill unskilled and semi-skilled workers.

The objective of the private sector is to make profits and not to increase the income of its vast untrained workforce by qualifying them through the process of skill development. It will select only pre-trained, skilled, and experienced workers. It is obvious that the government will have to bear the responsibility for this.

It seemed that the Modi government would take this matter seriously. In 2014, the Ministry of Skill Development and Entrepreneurship was established for the first time. Under the Skill India Mission, which was launched in July 2015, the target was to impart employable skill training to 40 crore people by 2022.

The Pradhan Mantri Kaushal Vikas Yojana launched in 2016 includes construction, electronics and hardware, food processing, furniture and fittings, handicrafts, gems, and jewelry and leather fibers. Under this, a target of skilling one crore youth was set between 2016 and 2020.

But during this period only 50 lakh youths have been made skilled. Out of the 2500 centers opened across the country under this scheme, many centers have closed down. These central leaders have alleged that the state is giving work to big industrial houses instead of giving them work. A state of confusion has arisen as the government frequently changes its policies related to skill development.

Only 57 percent of the youth who acquire skills are placed. Overall, the Skill India Mission is a success in government advertising like many of the Modi government’s high-profile schemes. The government does not even provide an adequate budget for it. And to eliminate inequality, governments should ensure universal access to health, education, and other public services.

Their privatization must stop. Social security and pension and child welfare should be part of government policies. All government schemes should be equally beneficial for women.

As women spend millions of hours taking care of their families without any pay, government schemes should focus on liberating them. There should be consensus at the global level to review the tax system. For this, rules and institutions should be created at the global level.

Care should be taken not to ignore the situation of developing countries. Tax evasion by corporates and the super-rich is to be stopped. They will have to be taxed more. The tax burden should not be placed only on the common man but should be fair.

Recently, politicians like Alexandria Ocasio Cortez, Elizabeth Warren, and Bernie Sanders in countries like the US have made tax reform a popular topic by suggesting higher taxes on the wealthy. There should be an open discussion on this issue in India as well.

We have to formulate concrete and time-bound policies and action plans to eradicate inequality. The fact that social order cannot last long by ignoring the common people leads to nothing but anarchy. This situation will become a challenge to the harmony and peace of society.