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India’s income inequality - cold truth
The latest edition of the World Inequality Report,2022 released by the world inequality lab a Global Research initiative, has confirmed that the world continues to sprint down the path of inequality, the Global multi millionaires have captured a disproportionate share of global wealth growth over the past several decades.
- According to report, the top 10% and top 1% hold 57% and 22% of the total national income respectively while isl ll the bottom 50% share has gone down to 13% making India a very unequal country
- The top 1% took 38% of all additional wealth accumulated since mid 1990s, whereas the bottom 50% have captured just 2% of it
- The gap between top 1% and bottom 50% is widest for India among major economies in the world
- The gap is wider than the United States, United Kingdom, Russia, France and China
- According to expert observation, the growth of bottom 50% in India occurred at the rate of 2.2 % per year between 1951 and 1981 but it remained exactly the same over the past forty years
- Unequal growth:A person born today would inherit a world that has never been more affluent but it is also a highly an equal world and the gap between haves and have nots wood for the widen as he or she grows up
- It can be said that nearly half of the world's population has neither the wealth nor the capital necessary for a decent life
- Inadequate public expenditure: the government after going for privatization for decades is poor and holds few assets depriving it off adequate twelfth aur capital to meet economic shock like that caused by covid-19 forcing it to borrow from private sources
- Concentration of wealth: the population that owns more wealth consequently earns more income resulting into concentration of wealth in hands of few individuals which effectively makes them the economic rulers
- Such a situation of inequality also prevailed in early 20th century and the periods before it when Western imperialism was at its peak and democracy was not as widespread
- If a person today belongs to the poorest half of the world his or her income would be half of what his all his/her ancestor in the same population group would have had way back in 1820
- The world's richest 1% who now control more than one third of global wealth generated since the 1990s
- The number of billionaires rose to new records in 2020, the year of pandemic
- The findings prove that the trend of 'rich getting richer and the poor getting poorer' has prevailed for a while now
- According to the report there has been unbridled inequality in both income and wealth with the rise of democracy, economic liberalisation and the free market
- It is following the similar trend as seen during the starkly different era of Western imperialism
- During both 1820 and 20-20 the top 10% of income earners accounted for 50-60% of total income while the bottom 50% have consistently been recorded with 5-15%
- The inequality does not question democracy but rather the choices we make under democracy
- Wealth is the capital of assets that an individual country holds now and that the next generation would inherit
- Income on other hand is the flow of money for an activity
- The level of wealth held of and decides the capacity to increase the level of in command
- The Global wealth was around 600 % of the global income level in 2020, the ratio was just 450% in the 1990s
- According to the report a wealth to income ratio of 450% implies that a country could decide to stop working for 4.5 years and still enjoy the same living standard
- Rise from 4.5 years to six years at the global level is a significant shift indicating a return of relative size of the stock of wealth versus The flows of income in contemporary capitalism after the drop of wealth to income ratios in the mid 20th century
- Per capita earning:India stands out in the term of income and wealth inequality, for instance per capita annual earning of the bottom 50% of population is Rs.53,610 while a person belonging to the top 10% earns 20 times this amount
- Policies of liberalisation:Since the mid-1980s, deregulation and liberalization policies have lead to one of the most extreme increases in income and wealth inequality observed around the world
- According to the report India stands out as a poor and very unequal country with affluent elite
- Wealth distribution:The wealth distribution of India also signals how fast inequality is growing, the general wealth held by the bottom 50% is just 6% of the Indian average
- Declining public wealth: the public wealth has been declining for two major reasons -
- The government has been privatizing assets and natural resources at low cost
- The government contract death to the private sector has made it richer
- Without assets government has low resources to invest, hence there is a need for strategic management of the economy
- Accumulation of wealth across generations: this accumulation has a snowball effect where in the successive generations would gain more but in their concentrated section that is why the wealth of rich section grows faster
- After the adoption of the Indian constitution, efforts have been undertaken to battle the basic absence of social democracy but it has remained confined to few states and regions, therefore the linkages between social structures, income inequality and poverty must be phased up to.
- Inequality hurts democracy, hence the government needs to intervene and regulate to fix this trend
POSTED ON 29-12-2021 BY ADMIN
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