One cannot cover the farming without challenging the big landlords, just like one cannot cover the labour without challenging the big capital. Without recognizing raising extreme inequality in the country

On Sunday, July 21, dozens of students, young journalists, activists, trade union leaders, and other sympathizers of the working-class movement gathered in Vidyasagar Hall, Kotturpuram, Chennai for a day-long workshop titled “Reclaiming the Space for Labour in Journalism: Beating Capital with Labour Beat”.

The Working Class consists of more than 50 crore of the Indian population, yet the journalistic space given to the stories that reflect the objective interests of the working class is vanishingly small in today’s media landscape.

Historically, there existed a dedicated ecosystem in the media, that covered such stories of interest to the Working Class. In the journalistic lexicon, it is called “Labour Beat”.

Given that this vanishing of labour beat from the media ecosystem is symbiotically related to the weakening of labour movement itself; a group of journalists, activists, and general sympathizers of the labour movement (in itself and its role in the overall democratization of the society) felt the need to have a closer look at the situation and brainstorming the way forward to nurture a newer generation of labour journalist equipped with newer tools available due to progress of technology. Thus arose the idea of this workshop.

In this report, we have documented various sessions of this workshop such as speeches on systematic erosion of labour beat, labour economy of Tamilnadu, ethics of Labour Journalism as well as hands-on interactive sessions on how to storyboard and methodology involved in making a video story. We also look at the various questions related to the demography of participants and accessibility of the venue, praises and criticisms from various sections, and reflect on the future possibilities.

This report emerged from our continuous engagement with the organizers over the weeks leading up to the program on Sunday and with our interactions with the persons from diverse backgrounds who participated in the program.

P Sainath’s Speech on the History of Labour Beat

Sainath in his speech covered how the media landscape (in terms of its class composition and its interest in the kind of stories it deems worthy) changed over the last few decades of economic liberalization and steadily increasing corporate monopoly over the media industry. He established his points with details of various publicly available statistical data.

He emphasized greatly the point that aspiring labour journalists must understand the context of change in the political economy and the rise of extreme inequality in the country in which they will be operating.

He started with his own experience of joining journalism nearly half a century ago and how things have changed since. At that time every established newspaper had a full-time labour correspondent.

In the early liberalization era of mid 90’s not a single newspaper had a full-time labour correspondent. By the beginning of the twenty-first century, the idea of dedicated labour beat itself started getting vanished and it essentially got merged into the industrial relation (IR) beat.

By 2005, there were essentially IR correspondents, who were basically communicating with the PR offices of the corporates.

It is ironic that such correspondents don’t have any actual contact with trade unions or the working class in general and they are essentially talking with industries to report about labour.

Sainath also emphasized that a number of other beats also essentially disappeared in the post-liberalization era. Around 15 years ago agricultural correspondents were basically communicating to agricultural ministers, not the people who make their livelihoods through farming.

Such agricultural ministers are so alienated from the actual farming process that they can’t even differentiate between two actual farm produce in practice. Today, such agricultural correspondents essentially talk to agribusinesses, not even govt officers in the agriculture departments.

No agricultural correspondent found it worthy to inform their readers about open official partnerships between certain agribusinesses and the Govt of India.

So, agribusinesses can now promote their products through official govt mechanisms. An aspiring journalist must understand this context and cover the stories through the lens of people.

Sainath also stressed that to cover a story genuinely from the people’s lens one needs to understand the labouring process first and need to challenge the persons holding the power positions. One cannot cover the farming without challenging the big landlords, just like one cannot cover the labour without challenging the big capital.

Sainath stressed about the rapidly rising inequality in India, especially after the liberalization in the nineties. He cited the work of the Inequality lab led by Thomas Piketty  and his team which concluded that the wealth inequality in today’s India is greater than the heyday of British colonialism. Till 1991, India didn’t have any dollar billionaires, while the first dollar billionaire arose in 1996.

Today India has 240 dollar billionaires, which consists of only 0.000015% of the country’s total population, and has an accumulated wealth nearly equal to 29% entire country’s GDP.

Their accumulated wealth is greater than the country’s agricultural budget itself. Even among them, 30% of wealth is controlled by the top 5 richest person of the country. Such a massive accumulation of wealth didn’t come from nowhere, but it came from the exploitation and pauperization of crores of ordinary toiling masses.

He told how the Covid-19 pandemic served as a clear indicator to understand the process of wealth accumulation at the top of the economic pyramid by making crores of labouring people poorer. While crores of Indians were trying to sustain the bare minimum; in the first 12 months of the pandemic, India added 42 dollar billionaires, 24 of which are from the health sector.

Rapid concentration of wealth is reflected in the expenditure of electoral campaigns and as a consequence who gets elected. The number of Crorepati MPs grew from 53% in 2009 to 93% in 2024.

Thus nearly 500 crorepati today represent crores of Indians who are on bare survival. Thus it is not hard to understand why people’s issues like poverty and unemployment are not focussed by them. Sainath gave a rather interesting analogy for visualizing the actual mammoth scale of unemployment in today’s India. He said that, if one makes a queue of unemployed persons in India, with each unemployed person covering half a meter, the resulting queue will be more than 3 times the length of the entire coastline of India (even including the coastline of the islands).

He concluded with an explanation of why all these don’t get represented in the media today. Today’s media is essentially the media and entertainment industry controlled by big monopoly capital.

There is an ownership concentration of the registered media, with most registered media owned by a handful of corporates, each owning many at a time. It is practically impossible to raise any issue that is against the interest of the owners.

Sainath also stressed the fact that how change in class composition in the journalists resulted in the change in class concerns as a result of liberalisation. Historically, in the ’60s and ’70s most journalists used to come from the working class and lower middle-class background.

They were less “educated” in the traditional sense, but had an organic link from the class they were coming from. Gradually, as journalism turned more towards corporate PR & entertainment and a profitable business model around it arose, journalism training schools started popping up like business enterprises.

This created a generation of journalists totally alienated from the labouring people. One needs more journalists from the working-class background to change this situation.

Sainath also stressed that while the emergence of newer forms of digital alternative media has enabled the possibility of bypassing the censorship of anti-establishment news in the print and Television media, one must keep in mind that there is a possibility of even worse censorship coming on these alternate media through the algorithms and modern technologies.

However, there still exists some space for pro-labour reporting in alternate media and one must utilize it.

To watch the recorded version of Sainath’s Lecture the interested reader can go to the YouTube Channel WU Live or Workers’ Unity Tamil.

A highly important question regarding the status of unionization of journalists came up during the Q & A session following the talk. Sainath replied that instead of an increase in unionization, rather there has been steady de-unionisation. It is more likely that this is related to the changing class composition of journalists.

Vidyasagar’s Speech on Labour Economy of Tamilnadu:

In his speech titled “Labour Structure & Conditions in Tamilnadu”, Vidyasagar, with the backing of various govt and non-govt data, explained the overall patterns in India’s labour economy from liberalization onwards, as well as specificities of labour economy of Tamilnadu.

He identified how the trend of growth without employment generation and Capitalism’s increasing aggressiveness to negotiate in favour of capital is worsening the already dire situation of the working class in terms of wages, social security, workplace safety, fighting strength, and organizational capacity.

Post-1991 union govt’s policies too aligned with pro-capital, anti-labour tend.

As a result of the influx of capital, there is a general trend of exodus from agriculture. However, this exodus didn’t happen to manufacture. There is a growing service sector and more rural labour are entering it.

As a general trend, over the last 30 years, both industry and agriculture is loosing the capacity to absorb labour. Construction provided around 36% of jobs between 2000 and 2015.

Even in the high-growth industries employment generation is stagnant. Nearly 50% of the workforce in India still depends on agriculture. To increase employment generation and wages in agriculture more govt intervention is needed, but capital is forcing the other way.

While both in industry and agriculture the output has increased, wages have declined. In fact, export production has seen an inverse relationship with the labour standards.

Vidyasagar emphasized about decreasing of formal/regular employment and increasing contract labour along with decentralization of industries as a general trend in the neoliberal era. In fact, contract labour is employed more in capital-intensive industries like automobiles. The percentage of contract labour in the automobile sector increased from 11.6% in 2000 to 44.7% in 2011-12 and currently, it is nearly 60%. The gap in income levels between contractual and regular workers is increasing drastically.

He also mentioned various categories of informal labour like self-earning initiatives, working in family enterprises, in establishments, etc. Surprisingly, self-earning initiatives like street vendors, hawkers, etc, have increased to cover nearly 60% of the informal labour. At present 93% are informal workers, while formal workers only account for 7%. New labour codes will only increase this trend of contractualization and informalisation, and workers will lose their existing rights.

The fighting strength and collective bargaining capacity of the working class have decreased drastically. Despite the tremendous increase in number of workers from the 1980 level, the number of days of workers’ strikes has decreased significantly. Currently, there exist around a dozen Central Trade Union Federations, with nearly 60k registered unions. However, due to causes like the reserve army of labour, and low-paid contract workers, the organizational strength of the workers has weakened significantly.

Vidyasagar then focussed on the specificities of Tamilnadu (TN). TN, with consistently ranking among the highest in the country in terms of Gross State Domestic Product (GDSP), significantly contributes towards India’s overall economic growth. In TN, there are major industrial clusters like automobile, manufacturing, textile, electronics & pharmaceuticals. Chennai, the state capital is a prominent IT & business hub further bolstering economic activity.

TN is among one of the highest-performing states in India in terms of the Human Development Index (HDI) has seen significant improvement over the years in social indicators like education and healthcare. TN also has a legacy of social reform programs & it has been pioneering in social welfare programs. Although compared to other states TN’s performance is better, there are disparities in this success story. Gender roles and expectations continue to shape societal norms, influencing labour force participation patterns. Caste dynamics, prelevant in many aspects of life, also impact economic opportunities.

He pointed out certain important facts about the TN Labour Force patterns based on various public data. Labour Force Participation Rate (LFPR) per thousand individual population, Periodic Labour Force Survey (PLFS) [https://microdata.gov.in/nada43/index.php/catalog/PLFS], and National Sample Survey Organisation(NSSO)[https://mospi.gov.in/NSSOa] data were used to arrive at these facts. The estimated labour force (15-59 years) grew at 1.19% per annum from 44.7% in 2001 to 45.6% in 2011. The ratio at all India level during the corresponding period was lower at 39.1% and 39.8% respectively.

2023 TN estimate is 54.7%. He mentioned that between 2001-2011 the proportion of persons who are not working in the state increased from 30.30% to 31.16%. Rural LFPR for men saw a gradual decline from 897 in 1993-94 to 838 in 2021-22, while rural LFPR for women in the same period declined more sharply from 680 to 530. The general national trend of increasing unemployment holds for TN also with 1.6% in 2011-12 to 3.6% in 2018-19.

He went further about characteristics of labour in TN with an emphasis on the young people (15-35 age group) who consists 35% of the state’s population. 7 out of 8 workers in TN work in the non-farm sector, with most of them being contract workers with a ‘footloose nature’ [https://www.amazon.in/Footloose-Labour-Working-Informal-Contemporary/dp/0521568242] of labour. Many youths were compelled to join as gig workers in Swiggy, Zomato, Ola, Uber, etc. They earn a mere 400-500 Rs per day with an average work time of 12+ hours per day. There is a trend of rural to urban youth migration with migrant workers being absorbed more in certain sectors. He also pointed out that about 30% of the people in 15-18 age are out of school and an increase in adolescent labour.

He ended his talk with certain criticism about the Dravidian model, especially on urban land usage and urban poverty, despite its relative success compared to other northern Indian states in terms of HDI. Dravidian model promoted urbanization through industrialization, increased infrastructure investments, introduction of pump sets for irrigation, creation of co-op societies, and so on to change caste-based occupations & caste discrimination, supported by social justice policies. In the process, urban areas are getting overcrowded, and more & more slums and in some cases, caste-based settlements are arising in urban areas. There is a repeating trend of slum clearance by the govt which has deprived youths of livelihood opportunities. Govt is planning to create a land bank of 45k acres in the next five years to attract investments, but there is nothing for the workers even in MOUs.

Journalistic Ethics and Labour Journalism:

The speech by Vidyasagar was followed by shorter talks by two in-house journalists of Workers’ Unity, namely Vaishnavi and Sandeep. They shared their insights on certain ethical issues while covering labour struggles and also a few minute but technical aspects that need to be kept in mind.

Vaishnavi used a video footage from a mainstream media covering a particular strike of women workers. She emphasized with particular examples how the reporting of that media is actually reporting from an angle of industry that production is being stopped, and not from the perspective of workers.

That’s why they didn’t take any in-depth interviews of workers there. They also didn’t ask the question about wages and working conditions in their report and what objective causes might have created so much anger among the workers. The entire environment was very emotionally charged and Vaishnavi emphasized that covering the story from a working-class lens doesn’t mean getting carried out by the emotions of workers also. A responsible labour-journalist must independently verify the claims made by workers also.

Sandeep said that at a time when rapid changes in the economic organisation is leaving the workers perilous, the journalistic resources, human and infrastructure, is scantily deployed to cover issues of labour relations. In other words, the ‘Labour Beat’ has been missing at a time when it is dearly needed.

Young journalist should come forward and cover the untold stories burried behind factories workshops around the country.

After this, there was a lunch break and a closed session for the pre-registered participants started after lunch.

Aparna’s Speech on Making Video Stories & various ethical issues:

The session after the lunch started with an “ice-breaking session”. In this session the participants were first asked to get familiar with the space by walking through the whole space and pausing periodically. Then they were asked to form pairs with someone they don’t know already and talk in pairs for sometime. After that they were asked to take the identity of other person in the pair and introduce the other person as self. We later came to know from the organizers that such a “ice-breaking session” is common practice in theatre circles.

Following this there was a talk by Aparna Ganesan on methodology involved in making a video story. At this point a brief introduction of Aparna is required for the reader.

Aparna Ganesan is an independent journalist and documentary filmmaker from India with five years of experience. She’s worked with DW News, Faultline Videos, Mongabay, and Asiaville. Aparna is a 2022 Earth Journalism Network Grantee and 2024 GRID ArendalGrantee. She’s one among ten journalists selected by the East-West Centre to do an Indian-Pakistan cross-border documentar

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On march 2024, the World Inequality Database released a report titled “Economic Inequality in India: The “Billionaire Raj” is now more Unequal than the British Colonial Raj” which comprehensively analysed wealth and income inequality in India from 1922 to 2022.

Among the 92 crore adults (aged 20 and above) in India, the average annual income in 2022-23 is Rs. 2.3 lakhs, which translates to less than Rs. 20,000 per month or Rs. 800 per day (assuming 25 working days per month). However, this average is misleading as most Indians earn significantly less. For instance, someone earning Rs. 24,000 per month earns more than 90% of the population, meaning that 82 crore adults earn less than Rs. 2.9 lakh per year.

The median annual income in 2022-23 is Rs. 1 lakh, meaning anyone earning more than Rs. 8,750 per month (Rs. 350 per day) earns more than the bottom 50% of the population, which consists of 46 crore people. For this bottom half, the average annual income is about Rs. 71,000, or less than Rs. 6,000 per month (Rs. 250 per day). The middle 40% of the population, about 36 crore people, have an average annual income of Rs. 1.6 lakhs, equating to Rs. 13,000 per month or Rs. 550 per day.

In contrast, income distribution in India is highly concentrated at the top. The top 10% (9 crore people) earn an average annual income of over Rs. 13 lakhs. The top 1% (90 lakh people) earn over Rs. 53 lakhs annually, and the top 0.1% (9 lakh people) earn over Rs. 2 crores. At the pinnacle, the top 0.01% (around 10,000 people) earn more than Rs. 10 crores annually, and the top 9,223 individuals earn an astounding average of Rs. 50 crores.

According to Forbes billionaire rankings, the number of Indians with a net wealth exceeding $1 billion (Rs. 8,300 crores) increased from just 1 in 1991 to 162 in 2022. Their total net wealth grew from less than 1% of India’s national income in 1991 to 25% in 2022, surpassing the entire Union budget of India. Among these ultra-wealthy individuals, savarnas are significantly overrepresented, making up 90% of the total. STs have no representation, OBCs own about 10% of the billionaire wealth, and SCs only a meagre 2.6%. Interestingly, during the Modi years (2014-2022), the OBC share in billionaire wealth fell below 10% from 20%, while the savarna share rose to 90% from 80%.

Inequality in India declined after independence until the early 1980s, but has been rising sharply since the early 2000s. In 2022-23, the top 1% of the population (just 1 crore people) controlled 22.6% of the national income and 40.1% of the national wealth. This extreme concentration of wealth and income among a tiny fraction of the population is likely the highest since 1922, surpassing even the inequality seen during British colonial rule. The report describes the present as an era of “Billionaire Raj,” dominated by India’s modern capitalists. India’s top 1%’s share of national income is among the highest in the world, exceeding that of South Africa, Brazil, China, the UK, and the US, making India one of the most unequal countries in the world. Meanwhile, 46 crore people, or 50% of the population, account for only 15% of the national income.

Now let us examine wealth inequality in detail. Physical assets like land and buildings constitute almost 90% of total household wealth. Since 1991, wealth concentration has increased, paralleling the trend in income inequality. The top 10% of the population saw their wealth share rise from 45% in 1961 to 65% in 2022-23. In contrast, the shares for the bottom 50% and the middle 40% have significantly declined over this period.

The top 1% of Indians have an average wealth of Rs. 5.4 crores, which is 40 times more than the average wealth of Indians (Rs. 13 lakhs). The bottom 50% have an average wealth of Rs. 1.7 lakhs, while the middle 40% have Rs. 10 lakhs. At the very top, about 10,000 of the wealthiest individuals own an average of Rs. 2,260 crores, accounting for 16% of national wealth, which is more than twice the wealth owned by the bottom 50 crore Indians.

To be in the top 50% of the population, one needs a wealth of Rs. 4 lakhs. To reach the top 10%, Rs. 22 lakhs is required, Rs. 81 lakhs for the top 1%, and Rs. 275 crores to be among the 10,000 wealthiest people (top 0.001%). The bottom 50% of the population holds just 6% of national wealth, while the top 1% owns 40%, more than five times that of the bottom half. Less than 1 crore people at the top own more wealth than the 85-crore people at the bottom. Furthermore, Forbes’ annual rich lists indicate that the net wealth of Indian billionaires has increased by over 280% between 2014 and 2022, a rate that is 10 times faster than the growth of the national income, which was 27.8% over the same period.

Savarnas, who make up just over 25% of the population, own nearly 55% of the national wealth, making them the only caste group whose wealth share exceeds their population share. In contrast, the wealth shares of SC and ST are less than half of their respective population shares. Other Backward Classes (OBCs) hold just under 35% of national wealth, which is about three-quarters of their population share.

Pai and Vats (2023) reveal that a very small segment of Indians dominate consumer transactions. Their data shows that only 1% of Indians (1 crore people) account for 45% of flights, 2.6% (4 crore people) invest in mutual funds, and 6.5% (5 crore users) handle 44% of digital transactions on the Unified Payment Interface (UPI). Additionally, 5% of users (29 lakh people) make a third of the orders on Zomato. The entire consumer and digital ecosystem are primarily designed to cater to the top 5% of the population.

The Indian government imposes minimal taxes on its wealthiest citizens and allocates very little funding to public healthcare, making it one of the lowest healthcare spenders globally. Instead of investing in a robust public health system, it has favoured the growth of a powerful private health sector. Consequently, quality healthcare has become a luxury accessible only to the elite. Despite being a leading destination for medical tourism, India’s poorest states suffer from infant mortality rates higher than those in sub-Saharan Africa. Additionally, India accounts for 17% of global maternal deaths and 21% of deaths among children under five years old.

Life expectancy at birth is significantly lower for the bottom 20% of households in India, at 65.1 years, compared to 72.7 years for the top 20%. Dalit women, on average, die 14.6 years earlier than savarna women. Tribal populations in India have a life expectancy approximately three years shorter than the non-tribal population, with 42% of tribal children suffering from malnutrition. Despite 75% of the population living in rural areas, only 31% of hospitals and 16% of hospital beds are located there. According to a World Health Organization (WHO) report, the lack of adequate public health infrastructure and the high cost of private healthcare are impoverishing over 5 crore Indians annually.

According to the Oxfam report 2023, India has the highest number of poor in the world, with 23 crore people living in poverty. Wealth inequality has deprived 70% of Indians of a healthy, consumable diet, leading to 17 lakh deaths annually from malnutrition-related diseases. Even the median wage earner, who earns more than the bottom 50% of the population, earns just enough for basic sustenance, and losing a week’s income could push them to starvation. Wages for the bottom tier have stagnated, and rising inflation has led to reduced consumption and eroded household savings. A 1% increase in food inflation can cause a 0.5% rise in undernourishment and a 0.3% rise in infant and child mortality rates. The bottom 25% of the population spend more than 53% of their income on food, making them highly vulnerable to acute malnutrition due to food inflation. This inflation forces them to cut back on essential expenses for health, education, clothing, and shelter.

Another major issue is the lack of quality education for the majority of the population, which is made deliberately expensive so that it will remain accessible only to the elites. According to the 2011 census, nearly 30% of Indians were still illiterate. In recent years, the government has cut funding for social justice schemes, such as scholarships for students from marginalized communities. Additionally, public universities across the country have seen massive fee hikes. Dropout rates among primary classes doubled in 2021-22. The dropout rate at the secondary level is 15.6% for the general category but significantly higher for marginalized communities: 22.5% for SCs, 26.9% for STs, and 20% for OBCs. The unavailability of schools within 5 km makes it difficult for girls to attend school, putting ten million girls at risk of dropping out. More than half of children between 14 and 17 years old are unable to access secondary education in India.

In India, the majority of workers are in the informal sector, lacking job security, fixed salaries, or legal protections. According to the NCRB, an average of 115 daily wage workers died by suicide each day in 2021. Inequality is further exacerbated by caste and gender, with marginalized castes earning 55% less than savarnas, and women earning only 63 paise for every rupee earned by men. Additionally, rural workers only earn half as much as their urban counterparts.

Official statistics reveal sluggish economic growth during the Modi years, with real year-on-year income growth rates declining from over 6% in 2015-2016 to 4.7% in 2017, 4.2% in 2018, and a dramatic drop to 1.6% in 2019. This downturn occurred before the COVID-19 pandemic, which further caused incomes to plummet by 9% in 2020. Unemployment rates, especially among youth (15-29 years), saw a significant rise from 2011-12 to 2017-18. Real wages across various sectors have stagnated over the past decade. Between 2014 and 2022, the primary beneficiaries of government economic policies have been the super-rich, particularly the top 1% and above. Wealth concentration at the top has significantly increased, making India’s recent economic system resemble a “conclave economy.” In such a system, decision-making and economic benefits are concentrated among a small, exclusive group of elites who wield disproportionate control and influence over economic policies, resources, and opportunities, often to the exclusion of the broader population.

Direct taxes, such as income tax and corporate tax, primarily target the rich (top 10%), while indirect taxes, such as Goods and Services Tax (GST), excise duties, and sales tax, affect everyone, including the bottom 90%. Income tax is progressive, taxing higher income earners more, whereas indirect taxes are regressive, impacting all individuals equally regardless of income. From 2017 to 2020, only 9% (8 crore) of Indians filed income tax returns, as only those in that bracket earned enough to pay income tax.

In 2019, before the pandemic, the Central Government reduced the corporate tax rate from 30% to 22%, with newly incorporated companies paying just 15%. This policy change resulted in a revenue loss of Rs. 1.8 lakh crore. Similarly, in 2020-21, the government lost over Rs. 1 lakh crore in revenue due to incentives and tax exemptions for corporations (an amount exceeding the budget for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)).

To offset these losses, the Union Government increased GST on essential goods and excise duties on diesel and petrol while reducing exemptions. This shift towards higher indirect taxes disproportionately burdens the most marginalized populations. Failing to tax wealthy individuals and corporations fairly exacerbates inequality, forcing the government to raise indirect taxes and cut spending on essential services like public health, education, and social security, which are crucial for reducing inequality.

Consumption taxes like VAT are regressive, as the poor pay a larger share of their income. The bottom 50% of the population pays six times more in indirect taxes, as a percentage of income, compared to the top 10%. Of the total taxes collected from food and non-food items, 64% comes from the bottom 50%. Nearly two-thirds of the total GST revenue comes from the bottom 50%, one-third from the middle 40%, and only 3% from the top 10%. More than 50% of the government’s tax revenue comes from indirect taxes, disproportionately affecting the poor.

The Indian income tax system is also regressive when considering net wealth. A restructuring of tax laws to account for both income and wealth, along with broad-based public investments in health, education, and nutrition, is essential.

Oxfam report shows that just taxing the 160 Indian billionaires can significantly fund essential programs. A 3% wealth tax on billionaires can fund the National Health Mission for 3 years, while a 2% tax on them can fund the Supplementary Nutrition Programme. A 5% tax on the top 10 billionaires can cover tribal healthcare costs for five years. Raising health expenditure to 3% of GDP is achievable by taxing just the top 100 billionaires at 2%. Taxing the wealthiest 100 billionaires at 2% would cover the cost of running Breakfast Scheme for nearly 3.5 years. A one-off tax on unrealized gains from 2017–2021 on just one billionaire, Gautam Adani, could have raised Rs. 1.79 lakh crore, enough to employ more than 50 lakh Indian primary school teachers for a year.

A new progressive tax regime was proposed which taxes only the ‘crorepatis’ and leaves 99.96% of the population untouched, thereby taxing only the very wealthy. These taxes kick in only for those with a net wealth exceeding ₹ 10 crore (only the top 0.04% of adults would fall above this threshold). The total wealth of this top 0.04% is 25% larger than India’s entire economy. In the baseline tax proposal, a 2% annual tax on net wealth over ₹10 crore and a 33% inheritance tax on estates over ₹10 crore would generate 2.73% of GDP in revenue. The moderate tax variant suggests increasing the wealth tax to 4% for wealth over ₹100 crore, alongside a 33% inheritance tax on estates between ₹10 crore and ₹100 crore, and 45% on those over ₹100 crore, yielding 4.6% of GDP. The ambitious tax variant proposes higher rates of 3%-5% for wealth tax and 45%-55% for inheritance tax, potentially generating 6.1% of GDP in revenue.

The revenue from the baseline variant could nearly double the current public education expenditure. The moderate variant could nearly double the combined health and education budget or more than triple health expenditure alone. The ambitious variant could double the combined health and education budget and still leave surplus funds.

Savarnas hold a significantly disproportionate share of national wealth, and Indian billionaires are largely a savarna club. A progressive wealth tax package of the kind proposed above is most likely to benefit Dalit Bahujan Adivasis and the middle classes at the detriment of only a tiny number of ultra-wealthy upper-caste families. In that respect, besides addressing extreme wealth inequality, such taxes could also play a small role in weakening the rigid link between social and economic inequalities in India.

The government should also reduce the GST slabs on essential commodities which the poor consume, and hike the taxes on luxury goods which the top 1% consumes. This will lead to revenue generation, which is progressive in nature and reduce the burden on the poor. The government spending on public healthcare and education needs to be much higher and proper worker protection measures should be implemented to protect the labour rights of the informal sector. The government should stop working for the greed of 1% and work for welfare of the 99%.

“When the people shall have nothing more to eat, they will eat the rich”

Jean-Jacques Rousseau

The post The Growing Divide: A Deep Dive into India’s Inequality Crisis appeared first on SabrangIndia.

Further, the wealthiest 1% among them grew their wealth by nearly 16 percentage points to 29.4% over the decade to 2012, the paper, entitled ‘Wealth Inequality, Class and Caste in India, 1961-2012’ and published in November 2018, said.

The vast inequality of income and wealth between and within castes highlighted in the paper are significant in the light of the Bharatiya Janata Party government’s new bill to entitle poorer sections among the forward castes to a 10% quota in government jobs and higher education institutions, which has been challenged in court.

Not only is the wealth and income gap large, it is growing–across all castes, in the 36 years till 2016, the share of wealth held by the top 10% has increased 24 percentage points to 55%, as IndiaSpend reported on January 2, 2019.

Inequality between castes
Marginalised caste groups such as the scheduled castes (SCs), scheduled tribes (STs) and other backward castes (OBCs) earn much less than the national household income average of Rs 113,222, according to the paper. SC and ST households earn 21% and 34%, respectively, less than the national average. OBC households fare better but still earn 8% or Rs 9,123 less than the annual Indian average.

Among upper caste groups, Brahmins earn 48% above the national average and non-Brahmin forward castes, 45%, said the paper, ‘Wealth Inequality, Class and Caste in India, 1961-2012’.

On January 9, 2019, the Indian parliament approved the Constitution (124th Amendment) Bill to provide 10% reservation in government jobs and higher education institutions for economically weaker sections of the general category of citizens. These are families that do not belong to SC, ST or OBC categories, and earn less than Rs 800,000 annually, own less than 5 hectares of agricultural land and own residential properties smaller than 1,000 sq.ft.

Based on the World Inequality Database, the paper combined data from wealth surveys, the National Sample Survey-All India Debt and Investment Survey (NSS-AIDIS), and millionaire lists. It used the censuses, the NSS-AIDIS and the Indian Human Development survey to explore the evolving relationship between class and caste in India.

“Economic ranking follows caste hierarchy, making caste a valid stratification in the society,” the paper noted. “It is important to keep in mind that the standard deviation is also very high in FC groups, i.e. not all are well off in that group. The clustering of social groups in (sic) not perfect.”
Within castes, the highest differences are among forward castes–and growing–and the least wealth differences are to be found among SCs.

“Caste and class are largely co-terminus with few exceptions and life-chances in India continue to be based on one’s caste position,” A.R. Vasavi, a social anthropologist and independent researcher, told IndiaSpend. “From allocation of resources, to opportunities, to social capital the distribution pattern matches the skewed social structure; those higher in the ranking gain or get better allocations at the cost of denying the majority.”

India is one of the most unequal countries in the world with the top 10% controlling 55% of the total wealth, up from 31% in 1980, according to the 2018 World Inequality report, as IndiaSpend reported on January 2, 2019.

The National Family Health Survey 2015-16 (NFHS-4) showed that 45.9% of ST population were in the lowest wealth bracket compared to 26.6% of SC population, 18.3% of OBCs, 9.7% of other castes and 25.3% of those whose caste is unknown, IndiaSpend reported on February 28, 2018.

Muslims have lower income than average, non-Hindu, non-Muslim groups have highest
Muslims, while faring better than the SC, ST and OBC population, reported an annual household income 7% less than the national average.

Others (non-Hindu, non-Muslim groups and those who do not fall under the SC, ST and OBC categories) were found to be the richest group, though they make for only 1.5% of the country’s population, the paper said. They earned an annual income of Rs 242,708, twice the annual household income average in India.

“Caste, kinship or family, either or all these can hamper economic progress if they impose restrictions,” Andre Beteille, professor emeritus, department of sociology at the University of Delhi, told IndiaSpend.

Compared to population, wealth held by SC and ST was low
Though SCs constitute nearly 18-20% of India’s population, the wealth they held was 11 percentage points less than their population share in 2012. In the case of STs, it was nearly 2 percentage points less than the community’s population share (9%), the paper shows.

“OBC group owned 32% of total wealth in 2002 which increased only marginally in 2012 resulting in overall worsening of the gap relative to population share (-7.8% to -10.2%), due to considerable increase in their population share,” the paper notes.

The forward caste group share has shown an increase from 39% to 41% in their share in total wealth and improved the gap from by 4 percentage points to 18%.

Wealth inequalities within castes, sharpest among forward castes
As mentioned earlier, the forward castes showed the highest (47.6%) increase in wealth among the top 5% of the three caste groups during the decade ending 2012. By 2012, the group’s top 10% owned 60% of the total forward caste wealth.

In the same decade, among the STs, the top 1% augmented the wealth they held by 4.4 percentage points to 19.5% while the top 1% of SCs had increased their wealth by 2.5 percentage points to 14.4% between 1991 and 2012.

Among the OBCs and STs too, the top 10% had cornered most of the wealth. The top 10% of both groups held around 52% of wealth in 2012 and the top 10% of SCs’ share increased three percentage points to 46.7% in two decades till 2012.

“In 2002, a person from the ST group needed 23 times more wealth to reach to top decile [1/10th] from the threshold of second decile,” it noted. “Similarly for SC, OBC, FC and Muslim one required 22, 32, 45 and 57 times respectively to enter into the 10th decile.”

Share Of Wealth In Top Decile Among FC, SC, ST and OBC



Source: Wealth Inequality, Class and Caste in India, 1961-2012 (November, 2018)

Note: Graph shows the wealth share in top 10%,5% and 1% within different caste groups.

While the exact magnitude of inequality within broad caste groups may vary across the country, a World Bank study on inequality between caste groups in rural Bihar suggests that inequality among sub-castes may be a key driver of economic inequality in India, Livemint reported on July 25, 2018.

Among SCs, for instance, Musahars are much worse off than Chamars and Dushadh (all three belong to castes traditionally engaged in tasks considered menial) in terms of both monthly consumption expenditure and educational attainment. Among OBCs, sub-castes such as Koeris fare badly compared with most Dalit sub-castes, Livemint noted. It did not offer any explanation for this.

“Bottom 50% of the population has lost 2-4 percentage points within all the caste categories. The major decline [has been in the] share in FC followed by ST, OBC and SC and Muslims,” the paper noted.

(Paliath is an analyst with IndiaSpend.)

Courtesy: India Spend
 

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The global economy enables a wealthy elite to accumulate vast fortunes while hundreds of millions of people struggle to survive on low wages, according to an Oxfam report. EPA/Mast Irham

Athia Yumna, a senior researcher at the SMERU Research Institute who specialises in inequality issues, spoke to one of the report’s authors, Max Lawson, Head of Inequality Policy at Oxfam International, to discuss the report’s key messages and explore its relevance to Indonesia.

Athia: So, this year’s report highlights the theme of work and how we fight increased inequality by encouraging decent work. Is that the main message?
Max: Yes, exactly right. We know from the experience of countries like Brazil, and now quite excitingly Korea as well, big increases in minimum wage can make a big difference to inequality.

There’s a great graph in the report, which we got from fantastic work done by the International Labour Organisation (ILO) in Asia. When you look at the compliance rate of minimum wage as well as that between women and men, there is a huge variation between countries and it is clear you need more investment in higher minimum wages and enforcement of minimum wage to make a big difference.

The other thing that really stuck with me in producing the report, was the human cost of these things. In Bangladesh, women workers don’t drink enough water in very hot conditions because they don’t want to go to the toilet [as they avoid toilet breaks to fulfil their work target], and it is quite common to have infection as a result. In the US, you have stories of poultry workers wearing diapers to work.

Athia: What is the aim of launching this report in Davos [at the World Economic Forum]?
Max: The main reason for launching this report around Davos is not because we think that the problems of the inequality crisis would be solved by the people of Davos. We think the inequality crisis ultimately will be solved by progressive politics and the power of ordinary people to demand change.

But by using the Davos event, where media focus on the richest people, the business and political leaders attending this meeting, and the world’s awareness of that, [there] is an opportunity to show that the problem is getting worse.

I think my favourite statistic in the report is that billionaire’s wealth is increasing six times faster than wages. It illustrates the thesis of Thomas Piketty’s book “Capital” – the idea that if wealth is consistently growing faster than income then your inequality crisis is getting worse.

Athia: What have we learned from past inequalities of the 19th and early 20th centuries? Is there any distinct characteristic between the past inequalities and what we face today?
Max: I think what’s clear is that inequality isn’t inevitable. History shows us it can be reduced in a peaceful way through progressive politics, or sadly, more often through war or serious conflict.

If you look at the progress, firstly in the US after the Great Depression and then in Europe straight after the second World War, and then if you look at the nature of growth in countries like Indonesia in the 1950’s to 1970’s, it was very inclusive.

But contrast that with the growth that we’re seeing today, again in Indonesia and elsewhere, where the majority of growth is going mostly to the top [income bracket]. History showed us that this [reducing inequality] is what the West did in the 1950s and 60s, Latin America has done it in the last 10 to 15 years and others are doing it as we speak.

Athia: What are the new policy recommendations in the report?
Max: I don’t think there is anything massively new because for a long time we’ve known what the right thing to do and we just need to see how come. So, there is element of repetition which can always come in.

I think what’s interesting in the report is some companies stop paying dividends to shareholders until they can show there is a living wage throughout their supply chain. We certainly have not seen that before.

Limiting the ratio between the highest and lowest paid employees is also interesting. We’re exploring new business models in which companies can operate in a way that aren’t making the problems worse.

We use the example of Mondragon, a big multinational company in Spain, that manages to pay its boss no more than nine times its lowest paid employees. There are examples of successful companies that operate in ways that reduce inequality rather than increasing it.

But, in terms of recommendations, it’s basically the same: The rich have to be taxed more and the poor need to be paid more.

Athia: What can Indonesia learn from other countries that have successfully progressed their tax policy?
Max: If we look at across the region, you’ve seen countries that are introducing good tax policies: inheritance tax in Thailand, it’s not perfect but it’s good to see; or property taxes implemented in Cambodia.

In 10 years time, I want to see great taxation and wealth and that can mean direct wealth taxation but it can also mean capital gains tax, property tax or inheritance tax. I think there is scope in doing that and various developing countries are already doing that.

Investing in collection is the first thing we can do. I think tripling the budget for tax enforcement and collection can also make a huge difference.

Athia: What’s your main suggestion for Indonesia to tackle inequality?
Max: I don’t think there is one country that offers a blueprint for any other country. Obviously, tax is incredibly important but I think in terms of Indonesia, the basic principle is that within next four to five years, the tax to GDP ratio could be increased by 4 to 5%, done as progressively as possible.

I think it’s quite reasonable. That additional revenue could double your health budget, have huge implications for public spending, and in turn, massively impact inequality.

Athia Yumna, Senior researcher, SMERU Research Institute

This article was originally published on The Conversation. Read the original article.

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What’s the best way to measure it?

Most inequality studies have focused on income – measures of which are widely available. However, being rich is not about a single year of earnings but rather about the accumulation of wealth over time. In the past, quantifying that has been tricky.

The wealthy would probably prefer we stay in the dark about how rich they are, presumably to avoid the aforementioned riots. People like me who study the topic, however, are always looking for more data and better and more accurate ways to measure the rich-poor gap. And while I’m not one to promote violence in the streets, I do believe it’s important for citizens to be fully aware of the levels of disparity in their society.

The most revealing way to do this, in my view, is by looking at wealth inequality.

Chris Rock cited the free food, drinks and massages at the Virgin upper-class lounge at Heathrow Airport in his comments about inequality. Faruk Ateş, CC BY-NC

Measuring the rich-poor gap

There are several ways to measure inequality.

One of the most popular is by income. That’s largely because there’s more data, and it’s a lot easier to measure. But this measure is a snapshot.

Wealth, on the other hand, is an aggregation, affected not only by current income but earnings accumulated in previous years and by previous generations. Only by studying wealth inequality do scholars, policymakers and others get the deepest and broadest measure of the gap between the rich and everyone else.

How much wealth someone has is also a better measure of their quality of life and opportunities. It determines the ability to invest in education, financial assets and the comfort and security of one’s retirement. Wealth also mitigates worries about paycheck variability or unexpected expenses. If you have wealth, the sudden cost of replacing a broken water heater or paying a medical bill doesn’t cause nearly as much stress as if you’re poor.

Most of the gains from the recent tax package will accrue to the richest Americans. AP Photo/Jacquelyn Martin
 

American ‘exceptionalism’

When we do look at the data on wealth inequality in the U.S., it’s stark and dwarfs that of the rest of the developed world.

The conservative Hudson Institute in 2017 reported that the wealthiest 5 percent of American households held 62.5 percent of all assets in the U.S. in 2013, up from 54.1 percent 30 years earlier. As a consequence, the wealth of the other 95 percent declined from 45.9 percent to 37.5 percent.

As a result, the median wealth of upper-income families (earning US$639,400 on average) was nearly seven times that of middle-income households ($96,500) in 2013, the widest gap in at least 30 years.

More notably, inequality scholars Emmanuel Saez and Gabriel Zucman found that the top 0.01 percent controlled 22 percent of all wealth in 2012, up from just 7 percent in 1979.

If you only looked at data on income inequality, however, you’d see a different picture. In 2013, for example, the top 5 percent of households earned just 30 percent of all U.S. income (compared with possessing nearly 63 percent of all wealth).

While the U.S. is not the only developed country that has seen wealth inequality rise over the past three decades, it is an outlier. The wealthiest 5 percent of households in the U.S. have almost 91 times more wealth than the median American household, the widest gap among 18 of the world’s most developed countries. The next highest is the Netherlands, which has a ratio less than half that.
 

Lifting all boats?

The recently passed Tax Cuts and Jobs Act will make this problem a whole lot worse.

The main features of the law include doubling the standard deduction for individual taxpayers, a temporary reduction in the top marginal tax rate from 39.6 percent to 37 percent, a significant reduction of the number of families subject to the estate tax and slashing the top corporate rate from 35 percent to 21 percent.

The main impact, however, is skewed to the wealthy. For example, the bottom 20 percent of households will see a lower tax bill of about $40 on average, compared with $5,420 for those in the top quintile. The richest 0.1 percent, meanwhile, will save $61,920. By 2025, the richest will see their benefit grow to $152,200, while everyone else won’t see much of a change. All the individual cuts are set to expire in 2026.

Wealthier taxpayers will also gain from the other main features of the new law. For example, research shows most benefits of lowering business taxes go to the rich, and fewer estates subject to the inheritance tax means more wealth accumulation across generations.

The tax law’s proponents claim that it won’t increase levels of inequality because the money that the rich will save will “trickle down” to other American households and lift their boats too.

Empirical evidence, however, suggests otherwise. Specifically, channeling more money to the rich, via tax cuts, does not improve economic growth, worsens educational opportunities for poorer Americans and even reduces life expectancy, which declined for a second year in a row in 2017.

How rich are the rich? Chris Rock knows. mpi04/MediaPunch/IPX
 

Let’s learn the facts

So is Chris Rock right that Americans just aren’t aware of the levels of disparity in their society?

Surveys suggest he is. Respondents to a 2011 national survey, for example, “dramatically underestimated” levels of wealth inequality in the U.S.

The survey, and other research, also partially affirmed the other half of his quote by showing that by and large Americans do care about wealth inequality and would prefer it to be lower.

Whether existing wealth inequality in the U.S. is socially or morally sustainable – or might lead to the riots envisioned by Chris Rock – is an open question.

Whatever happens, first things first, we need to know and understand just how bad wealth inequality in the U.S. has become. What we then choose to do about it is up to all of us.

Gil B. Manzon Jr., Associate Professor of Accounting, Boston College

This article was originally published on The Conversation. Read the original article.

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Findings on India in Oxfam Inequality report “Reward Work, Not Wealth”: 

India added 17 new billionaires last year, raising the number to 101 billionaires. Indian billionaires’ wealth increased by INR 4891 billion — from INR 15,778 billion to over INR 20,676 billion. INR 4891 billion is sufficient to finance 85 per cent of the all states’ budget on Health and Education.

73 percent of the wealth generated last year went to the richest one percent, while 67 crore Indians who comprise the poorest half of the population saw one percent increase in their wealth. In the last 12 months the wealth of this elite group increased by Rs 20,913 billion. This amount is equivalent to total budget of Central Government in 2017-18.

India’s top 10% of population holds 73% of the wealth. 37% of India’s billionaires have inherited (family) wealth. They control 51 per cent of the total wealth of billionaires in the country. Only four women billionaires in India and three of them inherited family wealth. Between 2018 till 2022, India is estimated to produce 70 new millionaires every day. Number of billionaires has increased from only 9 in 2000 to 101 in 2017.

51 billionaires out of the total 101 are 65 years or above and own Rs 10,544 billion of total wealth. If we assume that in the next 20 years, at least Rs 10,544 billion will be passed on to the inheritors and on that if 30% inheritance tax is imposed, the Government can earn at least Rs 3176 billion.

Rs 3176 billion sufficient to finance 6 crucial services–Medical & Public Health, Family Welfare, Water & Sanitation, Housing, Urban Development and Labour & Labour Welfare in all States. Over the next 20 years, 500 of the world’s richest people will hand over $2.4 trillion to their heirs – a sum larger than the GDP of India, a country of 1.3 billion people.

In countries like India and the Philippines, at least one in every two workers in the garment sector are paid below the minimum wage. It would take 941 years for a minimum wage worker in rural India to earn what the top paid executive at a leading Indian garment company earns in a year.

It would take around 17.5 days for the best paid executive at a top Indian garment company to earn what a minimum wage worker in rural India will earn in their lifetime (presuming 50 years at work).

It would cost around Rs 326 million a year to ensure 14,764 minimum wage workers in rural India were paid a living wage. This is about half the amount paid out to wealth shareholders of a top Indian garment company.

Results of Oxfam Survey 

New research by Oxfam seeks to understand perceptions of inequality and support for redistribution policy options.137 Over 70,000 people were surveyed in 10 countries across five continents, representing over one-quarter of the world’s population and more than a third of the world’s GDP. These online surveys collected data from nationally representative samples in the United States, India, Nigeria, the United Kingdom, Mexico, South Africa, Spain, Morocco, the Netherlands and Denmark.

In India, specifically among people who think they are poor, seeing where they actually sit in the national income distribution resulted in almost 15% more respondents agreeing it is difficult for a person to increase the amount of money they have despite working hard. 84% Indians agree or strongly agree that the gap between the rich and poor in [country] is too large.

In terms of attitudes and beliefs about inequality, nearly two-thirds of all respondents think the gap between the rich and the poor needs to be addressed urgently or very urgently. And many have an even stronger sense of urgency: 73% in India, 79%in South Africa, 85% in Nigeria, and 93% in Mexico believe this.

There is also strong support for increasing the tax rate for the top 1% of income earners. When asked whether government deficits should be reduced by cutting public services or by increasing taxes on the 1%, over half of respondents selected higher taxes for the 1%. 52% Indians agree that income taxes on the richest 1% of people should be increased.

When respondents were asked to choose specific policy options to be put in place to tackle inequality, in nine out of the 10 countries, the four most selected options across countries were: 1) provide free and high-quality education and medical care; 2) fight corruption; 3) raise the minimum wage; and 4) provide jobs with decent wages.
 

Recommendations

Oxfam India is calling upon the Indian Government to act on growing inequality ans create an equal India. Following are the recommendations:
 

• Promote inclusive growth by ensuring that the income of the bottom 40% of the population grows faster than of the top 10% so that the gap between the two begins to close.  This can be done by encouraging labour-intensive sectors that will create more jobs; investing in agriculture; and effectively implementing the social protection schemes that exist.
• Seal the leaking wealth bucket by taking stringent measures against tax evasion and avoidance; taxing the super-rich by re-introducing inheritance tax, increasing wealth tax, reducing and eventually do away with corporate tax breaks; creating a more equal opportunity country by increasing public expenditure on health and education.
• Bring data transparency, produce and make available high quality data on income and wealth. Regularly monitor the measures the government takes to tackle the issue of rising inequality.

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Newsclick Image by Sumit Kumar

Thomas Piketty and Lucas Chancel have just written a paper as part of their work for the World Inequality Report discussing the movement of income inequality in India. And their conclusion is that the extent of income inequality in India at present is greater than it has ever been at any time in the last one hundred years.

Their estimates go back to 1922 when the Income Tax Act became operational in India. The share of the top 1 per cent of the population in total income at that date was around 13 per cent. It increased to 21 per cent by the late 1930s and then fell to about 6 per cent by the early 1980s before rising to 22 per cent in 2014, the final year of their study.

What is striking about the paper’s finding is the almost exact synchrony between the break in inequality trends and the transition from dirigisme to neoliberalism. In the period between 1951 and 1980, the bottom 50 per cent of the population captured 28 per cent of the increase in total income while the top 0.1 per cent actually witnessed a decline in their income. In fact the income of the bottom 50 per cent increased faster over this period than the overall average. Between 1980 and 2014 however the top 0.1 per cent captured a higher share of the increase in income (12 per cent) than the entire bottom 50 per cent (11 per cent).

To be sure, data on income inequality can always be questioned. For a start we have no income surveys in the country; all we have are sample surveys relating to consumption expenditure and getting from the distribution of consumption expenditure to the distribution of income is problematical since we do not know how savings, which constitute the difference between the two, are distributed. Secondly, in all sample surveys, the top percentiles are always insufficiently represented, precisely because they are so few in number. Statisticians therefore make all kinds of assumptions about how income is distributed within the top decile to arrive at the share of the top 1 per cent or the top 0.1 per cent of the population. And these assumptions can always be questioned.

It is not surprising therefore that the Piketty-Chancel estimates too have been questioned by some commentators. But no matter how one views their absolute figures, the trends revealed by them can scarcely be questioned, since more or less the same method of estimation is employed across time. And this trend is entirely in conformity with what other researchers have been saying, and also with what one would theoretically expect. Credit Suisse for instance provides wealth distribution data. According to these data the top 1 per cent of households in India currently owns more than half (57 per cent) of the total wealth of all households, and wealth inequality in India has been rising extremely rapidly, indeed more rapidly than even in the United States.

Wealth distribution is invariably more unequal than income distribution, because the working class which has no wealth has nonetheless an income. Hence the Piketty-Chancel figures for the share of the top 1 per cent in income are by no means out of sync with the Credit Suisse figures about their share in total wealth. (By the same logic however they seriously negate estimates that put the share of wealth of the top 1 per cent at only 28 per cent, though even these latter estimates recognize the significant increase in wealth inequality since 1991 when neoliberal reforms began and when the share of wealth of the top 1 per cent was just 17 per cent according to them).

A measure of inequality that is often adopted is the Gini coefficient which captures the distance between the actual distribution and an ideal distribution characterised by absolute equality. The problem with the Gini coefficient however is that by looking at the distribution as a whole it misses out on questions like the shares of the top percentiles. For instance even when the share of the top 1 per cent may be increasing, the Gini coefficient may show a decline in inequality if some redistribution is occurring say from, say, the 4th decile from below to the bottom decile, ie, from the “poor” to the “very poor”. Piketty and Chancel accordingly do not use the Gini coefficient but look at the shares of the top few percentiles, which is a much more useful measure (especially if we are talking of economic power).

The Piketty-Chancel figures show that 1983-84 was the year of the lowest income-share for the top 1 per cent, after which this share started rising. It may be recalled that neoliberalism first made its appearance around that very time and that the budget presented in 1985 by Vishwanath Pratap Singh, who was then the finance minister in the Rajiv Gandhi government, contained significant steps in this direction (against which in fact the Left parties had organised a convention in New Delhi at that time). The association between growth in inequality and the pursuit of neoliberalism is thus strikingly close. And not surprisingly, such a growth in inequality has characterised almost every country in the world in the period of “globalisation” which is characterised by the almost universal pursuit of neoliberal policies under the diktat of international finance capital.

The authors, both in the paper itself and also individually in interviews, give a number of reasons why income inequality has increased in India in this period, reasons having to do with the pursuit of neoliberalism. The decline in the highest marginal income tax rate from 98 per cent to 30 per cent, the persisting inequality in land ownership, and the lack of access to education and health by the poor, are some of the points raised by the authors.

All these are very important. But there is an additional factor that needs to be mentioned here, namely the attack on petty production, including peasant agriculture, that neoliberalism has brought in its wake. While an improvement in the conditions of the peasantry does not necessarily benefit the agricultural labourers automatically, a deterioration in their conditions invariably gets “passed on” to the labourers. And what is more, since, in the event of such a deterioration, destitute peasants seek employment in the urban economy, where very few additional jobs are being created, they tend to swell the reserve army of labour which also affects the wages of the urban workers and hence the overall urban income distribution.

In other words, as rural India has on average a lower income than urban India, any widening of the rural-urban difference has the effect, other things being equal, of widening overall income inequality (by the Piketty-Chancel measure). But it also has the additional effect of widening the income inequality within the urban sector itself. It does this via a swelling of the reserve army of labour in the urban economy through the immigration of destitute peasants into it. For both these reasons, the assault on petty production launched by neoliberalism constitutes an important factor behind the growth of income inequality.

The case of China, where, according to these authors, income inequality was rising rapidly earlier but got reversed in the current century is instructive in this context. To be sure, there are basic differences between the Indian and the Chinese economies; but an important proximate factor behind the reversal of the growing inequality in China was the policy adopted by the Chinese Communist Party under the slogan “Towards a Socialist Countryside”. This policy checked and reversed some of the encroachments on peasant agriculture that the attempt to industrialise through a relentless export drive had entailed.

The introduction of a wealth tax (which, amazingly, India does not have), the increase in income tax rates upon the rich, the provision of quality education and health services to all under the aegis of the State, and of course land redistribution, are undoubtedly some of the steps that must be taken to reverse the growing income inequalities; and these entail a jettisoning of neoliberalism. But even while recognising this, we must also recognise, which the authors do not do explicitly, that neoliberalism is not just a policy of choice that can be given up at will. It corresponds to a stage of capitalism where international finance capital has acquired hegemony; overcoming neoliberalism therefore requires a class struggle against this hegemony through a wide mobilisation of workers and peasants.

The authors however rightly take on the apologists of neoliberalism who argue that such a growth in income inequality is essential for achieving the high GDP growth that has actually occurred in countries like India. This is absurd, since the highest rate of income growth that has ever occurred in world capitalism was experienced in the post-war period, during the so-called “Golden Age of Capitalism”, when income inequality actually was declining the world over. This decline in income inequality to be sure was not because of the operation of capitalism but because of the concessions that capitalism had been forced to make in the face of the looming socialist threat; but it shows that the argument that growing income inequality is essential for higher growth is a complete non-sequitur.     

Courtesy: Newsclick.in

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