The year 2019 was a year of global protests against inequality—from Chile to Lebanon to France, citizens came out on the streets to protest the rising power of the super-rich. Inequality this year has not been a fringe issue raised by radicals, but a mainstream issue of discourse in the corridors of power. Even mainstream economic institutions, not known for their radicalism like the IMF and World Bank, accept that it has gone out of control. Citizens the world over are again mobilizing this week as part of the Global Protest against Inequality. India is no exception.
The profound chasm between the rich and poor in India is not inevitable. It is the result of policy choices that successive governments have made in India. What governments have made can be unmade—if there is a will to change the prevailing reality.
Problem 1: Wealth is overwhelmingly concentrated in the hands of the elite.
While the previous year has been bad for India’s economy, its richest 1% held more than four-times the wealth held by 953 million people constituting the bottom 70% of its population. Some of this wealth needs to be redistributed to benefit the rest of India.
Solution: India needs to increase corporate taxation and introduce more targeted taxes on the super-rich (including inheritance tax and tax on dividends) to plough back India’s wealth for the benefit of India’s citizens. India’s corporate tax rate is moderate (34.61% compared to a global average of 23.62%). The effective corporate rate, however, considering exemptions, is only 26.87%. The wealth, thus generated, should provide more resources for public services and expand social protection.
Problem 2: The economic structure and labour policies are geared towards the rich.
The lion’s share of India’s workforce is in the unorganized sector, which is marked by inadequate regulation, low labour rights, low social security and lack of social protection that the formal sector enjoys. While the efforts like the recent Pradhan Mantri Shram Yogi Maandhan Yojana (voluntary pension scheme for the unorganized sector) are welcome, they do not go far enough.
While the rationalization of existing labour laws into four codes is appreciated, it is regrettable that the Industrial Relations Code Bill has been watered down to offer concessions to employers at the cost of workers’ welfare. Obscene gaps between the earnings of the rich and poor have opened up.
As the recent Oxfam India report suggests, it would take a female domestic worker 22,277 years to earn what a top CEO of a technology company makes in one year. With earnings pegged at ₹106 per second, a tech CEO would make more in 10 minutes than what a domestic worker would make in one year.
Solution: Concrete state-driven efforts to place social protection mechanisms, enforce living wage for all for workers (of government and corporations alike), stop labour abuses and protect the rights of workers to organize are needed. Voluntary welfare schemes like the scheme above for the unorganized sector need to be converted into legal provisions, whereby the state pays the premium for poor, unorganized workers and provides a social security net for all. Regressive provisions under the proposed Industrial Labour codes need to be reversed.
Problem 3: India is not doing enough to invest in the development of its human capital.
The quality of India’s public education system is poor, resulting in millions of citizens who either drop out of school or finish it without the skills needed to take on the jobs this economy needs. At the same time, poor healthcare means an excessively high disease burden in India and the risk of catastrophic expenses in the event of critical illness. Inequality in education creates inequalities in that knowledge that then last a lifetime.
Solution: The government needs to implement universal, free, quality and equitable public services like health and education as a right for all. Government spending on education and health needs to be enhanced to meet global benchmarks of 6% and 3.5% of GDP. Doing so would improve the government schools and health facilities—providing one of the most basic prerequisites for ensuring that everyone, and not just the rich, have access to public services of the highest quality. Strengthening regulation of private providers in health and education and their enforcement is critical to prevent overcharging and other abuses in these sectors.
Problem 4: India’s marginalized communities remain discriminated against, and the implementation of affirmative action provisions remains poor.
Discrimination against India’s traditionally marginalized communities: persons with disabilities, Dalits, Adivasis, religious minorities, transgender communities, has persisted.
Solution: India needs to put in place an umbrella anti-discriminatory legislation to address prejudice, discrimination and social exclusion of all forms, including based on caste, class, gender, religious or tribal status and disability. It should ensure effective implementation of affirmative policies already in place for Persons with Disabilities, SCs, STs, and minorities to address historical injustices against historically marginalized communities. The implementation of the Persons with Disabilities Act, in particular, needs to be strengthened.
Problem 5: Women continue to be discriminated against in India.
Estimated 239,000 girls under the age of five die in India each year due to neglect linked to gender discrimination. A gender gap remains in most development indicators. This is despite the fact that women and girls’ labour makes a significant contribution to India’s economy. Women and girls put in 3.26 billion hours of unpaid care work each and every day—a contribution to the Indian economy of at least ₹19 lakh crores a year, which is 20 times the entire education budget of India in 2019.
Solution 5: The government needs to take steps to correct the gender imbalance in key sectors that hold power in Indian society (like police, judiciary and legislature), address the gender wage gap in all sectors and invest in the care economy to enable women to enter paid labour.
None of this is possible without making governance more inclusive and providing more meaningful space for the involvement of civil society and citizens at large in decision making. This week, the Fight Inequality Alliance’s Global Protest against inequality provides space for youth, informal workers, children, women and men across the country to come together to demand action for a more equal and fair world.