TACKLING INEQUALITY DOES MATTER

The question of widening Inequality of income and wealth across the world and particularly in developing countries like India has been generating frequent debates in the academic and policy  circles particularly after the embarkement of liberaiisation and globalisation policies  adopted by large number of countries.Since the publication of a research paper entitled "Income and wealth Inequality in India ,1922-2023:The Rise of Billonaire Raj" by Thomas Piketty et.al not only revived the debate but also did influence even the election manifestos of political parties in India. The study showed that India is one among the most unequal countries in the world This upward trend in Inequality became more evident after liberalisation and globalisation when the number of billionaires in India rose in US $ terms from just one in 1991,to 52 in 2011 and 162 in 2022.Generalllly reasons attributed to inequality  are    concentration of income and wealth,,inadequate land reforms, corruption, favouritism,crony capitalism etc. Studies have shown that the extent of unholy nexus between the crony capitalists and political parties appears tobe very deep rooted and self perpetuating. The world inequality database slowed that in 2022-23 22.6% of national income went to to the top 1% of the population  which is the highest ever since 1922 in our country.wealth inequality is more glaring with top 1%of population possessing 40% share in total wealth.Oxfam study showed that the top 10% of population in  India holds 77% of total national wealth. Despite ranking 5th in the global ranking based on GDP the lions  share of  GST tax  burden (64%) falls on the bottom 50%  of our population .Similarly   India's performance in Global Hunger Index is very poor with GHI score of only 28,7,and  as per Global Gender Index India is ranked 127 out of  146  countries. 

           While  the left  view inequality is fundamentally undesirable- in contrast the right argues that economic inequality is inevitable just like inequality in other areas such as intelligence ,innovation, talents and ability. If one works harder, more enterprising and earns more it is difficult to argue that it is undesirable.In any case  If radical social change is not possible then redistribution through taxation, public investment in health and education, and legal and regulatory steps to curb abuses of power by the rich and some of the policy instruments at hand must be implemented,accordingly cost of such uneven growth needs to be seriously addressed and remedial measures need to be adopted. Public discussions are mostly confined to direct redistribution measures of "tax the rich and subsidise the  poor ". India has lower tax GDP ratio of only 17% compared to 25% in Brazil. Not only in India tax GDP ratio is low but her spending on social and welfare sector continues to be dismal. Major budgetary allocations of the Central Government on programs like Mahatma Gandhi National Rural Employment Guarantee Act,(MGNREGA) provision for education and children etc declined resulting on adverse impact on the poor. In a society where major source of livelihood is through generation of employment, joblessness due to declining employment elasticity of output  aggravate problem of unemployment further. Policy makers should focus better equitable growth where the purchasing power of the people also increases through efficient cash  transfer programmes.

Recently data point appeared in the Hindu showed that  personal income tax collections have increased while collections from corporate taxes have reduced. While the share of Direct Taxes to GDP has been decreasing the share of indirect taxes especially that of goods and services taxes excise duty, customs duty etc.are increasing .The pattern of taxaion in India shows that the poorer people and those belonging to the middle class group are increasingly shouldering the higher share of tax burden .Along with crony capitalism investment can flow from one country to other depending not only on tax differentials but also on facilities of ease of doing business. In such a scenario we have to  promote growth, and development along with promoting public welfare and reducing inequality by providing adequate social safety nets,adequate land reforms,providing inclusive growth through provision of food, health,nutrition, education gender development, employment and right based approach to basic human needs. As a first step authorities should equalize personal income tax rate with  corporate tax rates so as to maintain parity. Corporate Social Responsibility (CSR) initiatives of private sector companies should be made more efficient to focus on social sector and inclusive development. More over universal access to public services like  public health,education,social security benefits etc can reduce inequality and promote public welfare.