Nelson Mandela once said, “As long as poverty, injustice and gross inequality persist in our world, none of us can truly rest.”
With inequality growing at a rapid pace, the divide between the rich and the poor is also increasing. This makes it crucial to address this problem at the local, national, and global levels. Over the years, policymakers, academics, and various organisations have been striving to address this wide gap and draw attention to the growing importance of the subject.
With the top 1% population of India holding 42.5% of its total wealth, it is of vital importance that the dialogue about inequality be solidified in the world’s largest democracy.
The Global Wealth Report, 2019, published by Credit Suisse shows that financial stature at the very top is rapidly increasing while millions are forced to live their lives in acute poverty. While aggregate global wealth rose by $9.1 trillion to $360.6 trillion, a 2.6% increase over 2018, the bottom half of the world’s population collectively owned less than 1% of total wealth as of mid-2019.
The top 10% is estimated to own 82% of global wealth, with the top 1% owning 45%.
According to the report, and assuming that there is no change in wealth inequality, 670 billionaires are likely to emerge over the next five years, bringing the number around a staggering 2,450. A shocking yet interesting fact the report puts forth is that the number of billionaires has almost doubled with a new billionaire created every two days, since the global financial crisis.
This perpetual inequality, when seen from a macroeconomic viewpoint, has negative implications, disrupting economic stability and inclusive growth. With this persistent inequality, decision-making abilities are restricted to a few, leading to much greater social impacts. It also compromises positive measures taken, like poverty reduction mechanisms, and consolidates inequalities between males and females on multiple aspects such as health, education, and employment opportunities.
According to the Inclusive Development Index by the Davos World Economic Forum, India ranks 62 out of the 74 emerging economies. It lags behind its neighbors Nepal (22), Bangladesh (34) and Sri Lanka (40). The same report estimates that 6 out of 10 Indians live on less than $3.20 per day.
With the Gini coefficient, which serves as the most commonly used measure of inequality, rising to 83.2% in 2019 from 81.2% in 2008, wealth gaps in India have widened alarmingly. Over the last year, India added 416,000 dollar-millionaires, with the current estimates of dollar-millionaires in the country reaching to about 7,59,000.
The number of ultra-high net-worth individuals – those possessing fortunes worth $50 million or more – is estimated at 4,460, with 1,790 of these having a net worth greater than $100 million. Both numbers have risen by 1,060 and 290, respectively. According to Forbes, India had 106 billionaires in 2019.
Over the last year, India’s total wealth increased by $ 625.5 billion (approx. ₹4,42,5900 crore). An increase of 46% was registered in the wealth of the top 1% population in the country while the bottom 50% saw an increase of just 3%.
The numbers speak for themselves. India’s top 10% of the population holds 74.3% of the total national wealth. The contrast is even sharper for the top 1%.
India’s top 1% of the population holds 42.5% of national wealth while the bottom 50%, the majority of the population, owns a mere 2.8% of the national wealth.
In other words, the top 1% hold more than 4 times the amount of wealth held by 953 million people (or the bottom 70% of the population). The bottom 90% holds 25.7% of national wealth. The wealth of the top 9 billionaires is equivalent to the wealth of the bottom 50% of the population.
To unwrap this number, consider this – it would take a female domestic worker 22,277 years to earn what the CEO of India’s top tech company makes in a year. With earnings pegged at ₹106 per second, the CEO would make more in 10 minutes than what the domestic worker would make in a year.
This gap between the rich and poor is not uniform and the distribution of wealth among groups is not just exclusive to their gender, religion, caste, etc. but also is heavily dependent on their location, i.e. urban and rural.
And, to give some more perspective, the total wealth of the top 63 billionaires is higher than the Union Budget of 2018-19.
Further analysis of billionaire-wealth shows that there are 15 billionaires from the consumer goods industry, and more than 10 billionaires from the pharmaceutical industry in 2019 – a rarity among developing countries. In terms of the gender balance among Indian billionaires, there are only five women billionaires in the Forbes 2019 list, i.e. just 4.7% of Indian billionaires.
This inequality is widely visible along gender lines. India continues to rank poorly in the Global Gender Gap Report published by the World Economic Forum. According to the report, India ranks a low 112 out of 153 countries; faring poorly on three out of the four measured segments, i.e., educational attainment (112), participation and opportunity (149), and health and survival (150).
Moreover, due to the discriminating wage-gap that exists between men and women, households with women as the primary breadwinners are seen to perform poorly. In most cases, women are paid considerably lower for the same work done.
While it has been established historically that the transfer of women’s work from household to commercial employment is among the most notable features of economic development, India’s Female Labour Force Participation Rate (FLFPR) at 23.3% is extremely disappointing.
World Bank data shows that India is only ahead of nine countries in its FLFPR – Egypt, Morocco, Somalia, Iran, Algeria, Jordan, Iraq, Syria, and Yemen.
The more disturbing bit is the fact that the female labour force participation has been reducing since 2004-05; the numbers are especially stark for rural women – from 49.4% in 2004-05 to 24.6% in 2017-18. Then there is the quality of work that women are involved in, with textile-based vocations and house cleaning being the two most common professions among working women in urban settings.
In the rural scenario, more than 70% of women are engaged in agriculture activities of some sort, implicating that non-agricultural jobs are hard to find which, is a massive policy failure.
The labor force of any country is the most important aspect of its human resource potential. Data shows that only 31% of women with a bachelor’s degree or higher are part of the labour force in the country, while around 25% of the same were unemployed and currently in the process of seeking employment.
Due to the vast levels of discrimination, wage inequality and lack of decent work opportunities, many educated women in the country are ultimately forced to drop out of the labour force.
Among the states, Bihar ranks lowest among Indian states with an FLFPR of 4.1% while Meghalaya (51.2%), Chhattisgarh (49.3%), Sikkim (43.9%), and Andhra Pradesh (42.5%) recorded the highest rates of women’s workforce participation.
Studies establish the fact that an increased female labour force participation is associated with higher per capita GDP. According to the World Economic Forum estimates, an increase in female labour force participation could pump the Indian GDP by almost 27%.
Gender Equality is not only a means of achieving a healthier financial growth rate but also is a means to achieve a much wider set of sustainable development goals including but not limited to reduction of poverty, end of marginalisation, and more. Gender equal labour markets would not also serve as a boost for greater decision making, not only in employment settings, but also in their households.
You can read more here.
About the author: Shivam Pal is a guest writer at Oxfam India.