An inconvenient truth

India is one of the most unequal countries in the world — the richest 1 per cent own 60 per cent of its wealth

Written by Vikram Patel | Updated: January 28, 2017 12:28 am
World Economic Forum, WEF, Davos, WEF Davos, World Economic Forum davos, Russia, US, global economy, Donald trump, Brexit, US, European nations, Bernie sanders, world news, indian express columns If public anger is the result of inequality, then the recent Credit Suisse Annual Report on Global Wealth for 2016 should alarm Indian society.

The world’s elite, including political leaders and corporate titans, met at the annual World Economic Forum last week in Davos, where the smugness that comes with being invited to an exclusive event was overshadowed by the tumultuous political events of the past year for the global economy. The Forum discussed the contents of the Global Risks Report which identified a number of threats to the world order. At the top of this list, perhaps surprisingly, is not terrorism or climate change but the result of the neo-liberal policies which Davos itself exemplifies — income inequality. The report invokes the rich and powerful to suggest that a fundamental reform of capitalism is necessary to tackle the public anger which it blames not just for the popularity of Donald Trump, but also Brexit. On this matter, at least, the Davos plutocrats and I are in complete agreement.

If public anger is the result of inequality, then the recent Credit Suisse Annual Report on Global Wealth for 2016 should alarm Indian society. To be sure, the report was only documenting in stark numbers something any casual observer — who is not hiding his/her face behind a newspaper while his/her car stops at a traffic light to shut out those pesky street kids clamouring for a few spare coins— witnesses every day, every hour, every minute in this country. India is one of the most unequal countries in the world, and this inequality is growing at an astonishing pace.

Here are some sobering findings of the report. In 2016, the richest 1 per cent in India owned nearly 60 per cent of the country’s total wealth; in contrast, the equivalent figure for most western European nations is between 20 per cent to 30 per cent. The top 20 per cent commanded a staggering 80 per cent, while the entire bottom half of the country owned a pathetic 2 per cent. In the past six years, this share of wealth has shot up by an astounding 45 per cent. India was already more unequal, by a margin of 15 percentage points, than even the US where Bernie Sanders had declared that “a nation will not survive morally or economically when so few have so much, while so many have so little.”

In dishing out such grotesque injustice, we are far ahead of China and most other middle-income countries. The only major economy which beats us, and to which our billionaire barons, their economic gurus and their chums in India’s ruling classes can look up to, is Russia.

The causes and significance of inequality have long divided economists and politicians across the ideological spectrum, but the evidence on its impact on society is emphatic. In their classic book, The Spirit Level: Why More Equal Societies Almost Always Do Better, Kate Pickett and Richard G. Wilkinson describe the “pernicious effects that inequality has on societies: Eroding trust, increasing anxiety, and illness, (and) encouraging excessive consumption”. Their analysis demonstrates the strong correlation between higher levels of national inequality and a wide range of health and social problems, from poorer physical and mental health to higher rates of drug abuse, teenage pregnancies and violence. More worryingly, rising inequality is a major driver for the emergence of authoritarian leaders, championing a divisive agenda poisoned by sectarianism, xenophobia and nationalism. Rising inequality is fuelling conflict, both the incidence of crime in our daily lives (so vividly captured in Aravind Adiga’s White Tiger, where the protagonist, Balram Halwai, a village boy, ultimately kills his master and steals his money) and full-scale civil conflict and war.

Inequality corrodes the fabric of a society that is crucial for all people to feel they belong to it and have a stake in a shared future. Social scientists refer to this connectedness as social capital. It acts as an invisible glue that binds us all together, both rich and poor, through good times and bad. It is this communion of hearts and minds which promotes individual, and ultimately, societal well-being. In short, inequality destroys the soul of nations, of societies, of communities and, ultimately, of every individual’s well-being. Note the use of the word “every”; for this adverse impact is not only experienced by the poor (although they do bear the worst consequences), but also the richest. For the person who is hiding his face behind the newspaper and Looking Away (the title of Harsh Mander’s powerful book on this subject), inequality is bad for you too.

It is not surprising that reducing inequality is one of the UN Sustainable Development Goals which India has signed up to. And, indeed, inequality can be reduced, but it requires strong political will to do so. A number of middle-income countries have managed to contain and even reduce income inequality while achieving strong growth performance, belying the belief that inequality is inevitable while India struggles to achieve a basic standard of living for her population. It is a mystery why no political party championed the cause of reducing inequality (which is distinct from reducing poverty) in the last Lok Sabha elections and they are not doing so in their campaigns for the forthcoming elections.

Perhaps this is because inequality is an inconvenient truth in the saga of India’s shining future, one which everyone would prefer to ignore — not least because no one wants to promote policies which might hurt their own financiers. But there is no escaping the inconvenient truth that there will be no shining future if inequality is not arrested. We need a political consensus, to act with urgency, to reduce the grotesque levels of inequality which not only threaten our vision for sustainable development, but grievously insult our very humanity.

The writer works with the Public Health Foundation of India and the London School of Hygiene and Tropical Medicine

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  1. S
    Swadhyay
    Jan 28, 2017 at 1:16 am
    Vikram,come to India and seve your country, and use your expertise to remove inequality. Writing columns is easy, do something. Get inbound.
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    1. P
      PPrasad78
      Jan 28, 2017 at 12:06 pm
      All these pseudos will never bring up the issue of CORRUPTION which is the main cause of inequality ! lt;br/gt;These pseudos will never criticize the political cl or the bureaucratic elites who live like moguls thru Corrupt means.lt;br/gt;They only try to portray Capitalism as the main cause of inequality .lt;br/gt;Actually it is a Corrupt Political cl that leads to sham Capitalism.lt;br/gt;It is okay for people to earn and enjoy wealth thru honest hard work, talent and enterprise .
      Reply
      1. S
        Sukhvinder
        Jan 28, 2017 at 5:52 pm
        Inequality has been part and parcel of India. Nothing new. People who want to change have been able to do it. There have been rags to riches stories in India.
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        1. K
          K SHESHU
          Jan 28, 2017 at 2:36 pm
          India has ' division of labourers' ( ambedkar) and evrryone is not equal to the other ...
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          1. A
            Arpit Agrawal
            Jan 28, 2017 at 2:15 pm
            A wrong parameterlt;br/gt;lt;br/gt;While it may be convenient to measure inequality in terms of 'income or wealth', but are these the right parameters? Shouldn't inequality be measured on some 'real parameters' like health status, average schooling period, quality of education, etc. Doesn't money become redundant after a certain limit? To give a crude example, if a billionaire decides to set up a factory and earns profit from it, he/she may use the extra cash to purchase a Yacht, while those who get employment in that factory may invest in education and health of their family, thereby reducing the gap in these parameters. According to the parameter of 'income', the inequality has risen, but real sense, inequality actually came down!
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            1. B
              bala Raja
              Jan 28, 2017 at 5:29 am
              This article misses a key point. How many of the 1% who own 60% of the wealth are politicians, bureaucrats and others who are part of the system and have been swindling the wealth of the country? There should be no gripe about those who honestly made their wealth. After all, some one like Narayana Murthy, who started out in the middle cl and became super rich (in the process creating employment for so many) should not be the focus. But those who had nothing before they entered politics, but became multi-billionaires are the issue. This is the case in most corrupt countries, including Russia. So, there is no comparison between self-made wealth by legitimate means and illegal wealth. The latter is the problem in India.
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              1. D
                Danish
                Jan 28, 2017 at 4:43 pm
                A leading professor and expert on Islam has warned that the religion is "not sustainable" in its current form and called for more critical thinking.lt;br/gt;Ednan Aslan, 57, a professor for Islamic religious education at the University of Vienna in Austria and a frequent guest on German-language TV shows, said that in Islam too little is being questioned and too much simply taken for granted.lt;br/gt;lt;br/gt;He warned: "Islam, as it is now, is not sustainable," and said he wanted to "reshape the face" of his religion.lt;br/gt;lt;br/gt;Aslan said that Islam is "out of touch with the present" in the way it is currently taught.lt;br/gt;lt;br/gt;The Islamic expert is currently developing a curriculum for a new "Islamic Theology" course, in which he said he does not want to "inhale and breathe Islamic doctrine, but to question it".lt;br/gt;lt;br/gt;Aslan said: "We want to reshape the face of Islam. It is important that Islam is given a new face in order to be able to remain viable.lt;br/gt;lt;br/gt;"Currently, Islam is unfortunately a religion of isolation. A religion of migration. A religion of Turkey, of Saudi Arabia. But no religion of Europe, which advocates pluralism or prepares children accordingly for a plural society."lt;br/gt;lt;br/gt;The professor said that the way Muslim communities are depicted is often inaccurate. "Take the school books of the Muslim religious community of Austria. Muslim women are always depicted with a headscarf. But in Austria, only 20 percent of Muslim women wear a headscarf," he said. lt;br/gt;lt;br/gt;"Why do we base the image of Muslims on these women with headscarves? It is these organisations which shape our image of Islam, but they are just a small section of it."lt;br/gt;lt;br/gt;Aslan argues that the most important prerequisite for religious education - and for education in general - is that the children need to learn to think.lt;br/gt;lt;br/gt;He said: "This means that the children do not accept anything that is conve in the name of religion. They should also be able to question theological, religious content. Everything else is not a healthy religiosity.lt;br/gt;lt;br/gt;"What does a youth in Vienna learn when he reads how many camels, sheep, goats he has to give for Islamic charity tax? Or whether the Prophet has eaten grhoppers or not?lt;br/gt;lt;br/gt;"This is in a school book in the 21st century in Vienna. In this way, the children do not learn to reflect, but only learn how to accept the given rules."lt;br/gt;lt;br/gt;Aslan called for everyone to see European freedom as an opportunity to lead debates on how Islam is taught.lt;br/gt;lt;br/gt;He said: "Unfortunately, this is not possible in Islamic countries. They simply cannot lead this debate in Egypt, Iran, Saudi Arabia. Democracy is an invention of the Enlightenment.lt;br/gt;lt;br/gt;"And as long as there is no democracy in the Islamic countries, and we do not have the freedom to ask questions, nothing will change. If you cannot ask the President, how should you ask the Prophet?" lt;br/gt;lt;br/gt;More from The Local--- Austria.
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                1. N
                  N Joseph George
                  Jan 28, 2017 at 4:44 pm
                  None of the political parties is concerned about this grave problem Now, through GST and cashless economy the poor will be subjected to more looting.
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                  1. H
                    hbn
                    Jan 28, 2017 at 8:33 pm
                    Can you provide more insight to what you say? else it sounds like another armchair-economist-opinion??
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                    1. H
                      hbn
                      Jan 28, 2017 at 8:35 pm
                      nobody stops the other 99% to join the 1% club...
                      Reply
                      1. T
                        Tapash
                        Jan 28, 2017 at 3:18 pm
                        Problem is well-explained. But solution is hardly feasible in india. No political party would prefer the voters to be upgraded socioeconomically which might result in dearth of cadres and inability to manite m easily....so let it go......
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                        1. G
                          Garry
                          Jan 28, 2017 at 5:59 am
                          So what is your suggestion. Like almost every pseudo left liberal writer, it is just moaning and blaming Capitalism. Tell us your ideas on how to solve it you thugs.
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                          1. M
                            master
                            Jan 28, 2017 at 11:01 am
                            This inequality will keep increasing till Govts stop giving out freebees to poor.lt;br/gt;Poor too have to understand that freebees are just making them beggars, instead they should concentrate on getting jobs/bank loans to start business.
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                            1. N
                              Nazeer Hussain
                              Jan 29, 2017 at 8:20 am
                              Clowns like you have existed for 1400 years now, yet Islam is the largest religion in the world 1.4 billion and growing. Grow up
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                              1. P
                                pankaj
                                Jan 28, 2017 at 8:41 pm
                                Not really I do not care about Modi's ability to govern, what I know is that he is someone who has good intentions and courage both, so if he makes mistake, it doesn't get attached to his ego and he can try to correct his course. He tries for overall good for the country, not for his sons/families and he will continue doing it even if many in BJP itself do not want to take chances. lt;br/gt;What do you want? status quo for another 100 years?
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                                1. P
                                  pankaj
                                  Jan 28, 2017 at 8:01 am
                                  Thank God our people are not as bad t understanding things as our pseudos. lt;br/gt;lt;br/gt;There is a big difference between equality in poor nations and equality in rich nations. In rich nations the standard of living is high so everybody ends up having a minimum sustenance level and overall inequality seems less, in poor nations most have no modern amenities and only few have richness so inequality seems a lot more.lt;br/gt;lt;br/gt;India has 4 times more potion than US, has 1/5th of China's land and resources as well, including capacity to produce oil and is fairly poor. So it will take some time before India can bring standard of living up (which is kind of fake way to measure equality, in India). India has far better weather though where people can somehow sustain themselves with much less resources., lt;br/gt;lt;br/gt;What Modi is doing will fix some of the inequality in next 5-6 years with rich having less of free black money that can be transacted without government knowledge. Once Benami properties are eliminated most rich will be under the lense of government/tax and they cannot misuse their money.
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                                  1. P
                                    pankaj
                                    Jan 28, 2017 at 8:47 pm
                                    That is also not true, many hardworking guys still stay in India and in PSUs those hardworking guys work while 10 others just get their ries without doing any work. In all PSUs there are some really hardworking people and than 10 times of that are those who are doing only chamchagiri and politics. So India does have lot many talented people but their talen is under too much stress and misused as a talented engineer may have to work for his worker as well, because worker is either through politician or uninon and can earn money for free, then there will be some other workers who will be helping this talented engineer but will already be under stress because first the education of those good workers is not that great or they being more honest have many other difficulties. Telling you from actual experience. lt;br/gt;So these CPI/CPMs support goons and non-working workers, the good honest workers just work and survive somehow. Seems you do not know anything about India, where do you live? Not every mechanical and electrical engineer is working in software, for your information and generally only people in software are going to USA.
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                                    1. R
                                      Raja
                                      Jan 28, 2017 at 6:41 pm
                                      I am appalled as well as amused by the “love for equality” that exists in India. Let the author know that inequality is ingrained in the universe, and this very well applies to the amounts of wealth owned by various individuals in a country. Any attempt to bring about equality is doomed to engender corruption, poverty and depravity, which is what happened in the erstwhile Soviet Union and other countries that embraced socialism for a major part of the twentieth century. Everybody in Eastern Europe is breathing easy and getting progressively happier after discarding socialism, which attempted to enforce equal distribution of wealth among people. lt;br/gt; lt;br/gt;Consider the example of Mukesh Ambani and Anil Ambani, who each inherited an equal amount of wealth from their father, yet Mukesh today has thrice as much as Anil does. Did the former indulge in illegal means to get ahead of the latter? Scale down this scenario, and you will find that the situation at the ground level is similar. Is that illegal or unjust? lt;br/gt;lt;br/gt;Nowhere else in the world has inequality of wealth existed for so long as in the United States of America, and that is the country, which is the envy of all, including the communists. Indeed, the country has been in the driver’s seat for the entire world, as most sciences, technologies and other crafts originate in USA, so I don’t see anything wrong in the existence of inequality in India. lt;br/gt;lt;br/gt;Asking for equal distribution of wealth is a deadly proposition, for people are led to believe that they are poor because the rich folks indulged in the usurpation of their wealth. In the process, they develop dangerous traits like laziness, militancy and other forms of crimes. lt;br/gt;lt;br/gt;Let the author know that no two individuals in the world are equal, and this includes even those who are dead. The government’s task is to afford equal opportunities to all, and let people grow in their own ways. There is no need to impoverish the rich to enrich the poor. Disparity as such is a fact of the natural existence, and it is patently foolish to wish otherwise. Be grateful to the Tatas, Birlas, Ambanis, etc., who have been systematically contributing to the wealth of the country, and generating employment for the mes. Unlike the public sector undertakings, the Tata Empire has not encountered a single strike by its employees so far.
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                                      1. M
                                        Murali
                                        Jan 28, 2017 at 5:28 am
                                        this is the official record but the black economy has may billionaires too ....as many smugglers also own benami properties and they are not scared of the law of the land as that does not apply to them -30% of the Indian potion follow the rules set by the quran and not the consution-consution in India is only meant for the majority community ...so ur umption is incorrect
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                                          Rajesh Toppo
                                          Jan 28, 2017 at 4:10 am
                                          What is the percentage of inequality that a country with capital markets can sustain before it wilts under pressure ?? How much inequality can crony politicians and bearucrats create in society before the the society collapses to shreds. What is the capacity of indigenous potion to sustain harsh inequality before they take up arms ?? Inequality is a vast problem, so can the one% please stand up and be counted !!
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                                            RAKESH KUMAR
                                            Jan 28, 2017 at 5:08 am
                                            This is the achievements of the socialist governments led by Nehru, Indira, Rajeev, the great economist and champion of economic reforms as FM and with the help of jholawalas during 2004-2014 period as PM. In all these years, our champions of socio-economic order leftist bhailogs and intellectuals like Patels, have been the footsolders of our socialist masters.
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