The national crisis of Income Inequality in India
In early 2016, Shri. Narendra Modi the 18th Prime Minister of India had declared in Delhi, surrounded by India’s budding technocrats ” We have a million problems but a billion minds.” The occasion was the inauguration of the much vaunted Startup India Action Plan aimed at solving India’s enduring social and structural problems . Shri. Modi’s project of a shinning neo-liberal dream for an aggressively capitalist new India is not effulgent anymore in his second term. Largely, because of India’s enduring dichotomy as both a land of plenty and scarcity at the same time. This dichotomy in the nature of India’s society is majorly due to a continued and systemic income inequality in the country. Which subsequently leads to an enduring inequality in health, education and wealth among citizens. India stands presently at 47.9% in the Net Income Gini Index, one of the popular measures of income-inequality globally, where higher the value points to greater inequality. In context, Bangladesh did much better with 39.50% on the same index, indicating the need for implementing more demand side pro-poor policies for inclusive growth in India.
According to the World Income-Inequality Report 2018, India has had one of the sharpest rises in Income Inequality in the world in the recent past. The top 0.1% has garnered more cumulative income than the bottom 50%. Wealth is also plausibly, unequally distributed, with only 10% Indians owning 3/4th of the wealth (Chakravarty 2018).
Though much of this inequality can be blamed on the lopsided development agenda pursued since the deregulation in the 1990’s ( Chancel & Picketty 2017) but it can also be blamed at the poor understanding of the systemic integration of income distribution into multiple developmental factors. There are clear correlation between distribution of wealth and health; the poor seem to live longer in more equal countries (inequality.org). The key issues that influence income inequality in India, can be remembered as HELP, that is Health, Education, Labour and Population.
Short of completely upending the economic system of our country, which is not the domain of policy but politics, there are incremental ways which can lower the inequality of India by 2025. The first need is to invest a greater share of institutional spending towards Public Health, which is the cornerstone of human development. A healthy population can acquire education, implement change and be productive members of the national economy. Greater disease burden and morbidity lowers the chances of having a thriving labour force that propels the national economy to ever greater heights.
Second need is to reevaluate education, with the advent of the knowledge economy and the inevitable rise of AI and machine learning, the nature of education in India needs to change. It must move away from the degree granting to skilling and inculcating critical and creative thinking. So that the labour force of the country can engage with the global economy on equal terms, to create value for the nation and the individual. The idea is to convert “1.3 billion mouths to 1.3 billion minds”.
Thirdly, there is an urgent need to understand the labour-population nexus and act to reduce over-population. The measures directed at population control of the 1980’s and 1990’s have stalled, and public education towards the need for family planning has largely disappeared. No nation with limited territory can provide employment opportunities to an unending supply of labour short of imperial war.Whereas a larger population is burden on infrastructure, resources and a natural dampener on wages.
Lastly we need to integrate the disparate policy measures discussed here into India’s Grand-Strategy for inclusive growth in India. For without addressing all the systemic issues of the problem; no real changes in Income-Inequality can be hoped for within 2025. The change in national strategy away from core defense spending to a more people-centric approach is crucial for India’s continued sovereignty and integrity. For , a nation that does not have a healthy, educated and somewhat prosperous population is neither secure from internal upheavals nor external machinations.