Equitable wealth distribution is the need of the hour

Unfortunately, corporate economists have little idea about the distress that prevails in the farming sector, and they still go by the outdated economic thinking that relied on pushing farmers to join the army of migrant daily wage workers in the cities.

Even if it is for reasons that are purely political, a debate on redistribution of wealth in India is of utmost importance and is the need of the times. The obnoxious concentration of wealth in the hands of a handful minority of stinking rich, leading to the “Rise of the Billionaire Raj” as the Paris-based World Inequality Lab calls it, is certainly not because of the unleashing of an animal spirit of entrepreneurship but is a sad reflection of how gratuitously economic policies and resources have been placed at the disposal of a few.

When John Maynard Keynes wrote about “animal spirits” in his book ‘The General Theory of Employment, Interest and Money’ (1936), he explained it as an exceptional human behaviour that drives investors to take financial decisions at uncertain times. But probably what he did not realize was that denying the same opportunity to a majority population actually ends up destroying the animal spirits and passion prerequisite for a million flowers to bloom.

Keynes says: “... if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fail and die.”

In any case, where Keynes goes wrong is that it is not important to have a handful of billionaires whose wealth keeps on rising at the back of a well-designed supporting system, and that includes tax breaks, bank write-offs and economic stimulus packages, but to spend the same resources to build an egalitarian society where happiness and satisfaction reigns. After all, resources are limited and it’s important to see how these are distributed.

That is perhaps the reason why the four countries of the Nordic region – Sweden, Denmark, Norway and Finland – do exceptionally well and continue to top the happiness chart.

On a TV panel the other day, I was asked as to what the government can do now if it were to go in for redistribution of wealth.

To me, I said, it doesn’t look that the idea being to grab the wealth of rich and distribute it among the poor. What is required is to reframe policies and approaches ensuring that the benefit percolates to the last man standing in any nook of the country. My first suggestion would be to ensure that at least 50 per cent of the annual budget, Rs 47.66-lakh crore for 2024, should go for agriculture, which forms roughly 50 per cent of the population. With such a large population engaged with farming, all that the sector receives at present is less than 3 per cent of the budget allocation. You can’t accept a miracle to happen in agriculture is you are not willing to make an appropriate investment.

In a country where just 21 billionaires have more wealth than 700 million, and where 64.3 per cent of the Goods and Services Tax (GST) is coming from 64.3 per cent of the population and only three to four per cent from the top 10 per cent, it makes no economic sense in putting resources where already enough investments have been made. On the contrary, it is absolutely essential to redistribute the financial resources in a just and equitable manner. Why 50 per cent of the population engaged in farming is deprived of its rightful share of economic resources when successive governments have been making bulk of the budgetary provisions for the industrial sector year-after-year.

I was told that there is no tax on farm incomes, and that is a big financial support to this sector. In fact, a venture capitalist on the panel, even asked why shouldn’t the rich farmers be taxed not realizing that only 1 per cent of the farming community owns more than 10 hectares in India, and the average income of the remaining 99 per cent of the farming community, hovers around Rs. 10,000 per month as per the latest report of the Situational Assessment Survey for Agricultural Household, 2019.

Unfortunately, corporate economists have little idea about the distress that prevails in the farming sector, and they still go by the outdated economic thinking that relied on pushing farmers to join the army of migrant daily wage workers in the cities.

In my earlier columns in this newspaper, I have talked about agriculture being a victim of economic policies. Poverty is not pre-destined. As I have often explained, it is the outcome of flawed economics.

On another panel discussion, I spoke about how corporates have walked away with Rs. 16 lakh crore worth of bank write-offs in the past ten years, and have in addition been given a tax cut of Rs, 1.45 lakh crore every year since September 2019. So much so that the Reserve Bank of India (RBI) has directed banks to get to a ‘compromise’ with the wilful defaulters, who owe Rs. 3.45 lakh crore, and have the resources to pay back but they give a damn. The way farmers are routinely put behind bars for their inability to pay back bank instalments, the 16,400 wilful defaulters too should have faced prison terms. Instead they were let-off easily. With such heavy write-offs the rich obviously get a reprieve. Their lifestyle goes on as usual. If such bail outs are also given to farmers let me assure you they too would be able to exhibit their ‘animal spirits’.

At the time when the Vajpayee government first took oath in May 1996, at a meeting of economists called to suggest economic measures that the new government should take, my suggestion was to provide 60 per cent of the annual Budget for 60 per cent of the population engaged in agriculture (at that time agriculture formed 60 per cent of the population) if the idea was to avoid anti-incumbency. It may have been forgotten now but the Vajpayee government did announce that it would devote 60 per cent of its budget for agriculture. That would have been a turnaround that the country was looking for. It was also the first time as far as I can remember that an effort was made to redistribute resources.

Unfortunately, the government fell in 13 days.

If only the government had continued, the policy decision to spend 60 per cent of the budget allocation on agriculture would have surely revitalized the rural economy, and in turn created a boom for the national economy, thereby ensuring Sabka Saath Sabka Vikas by now.

With neo-liberalism gasping for breath, and in its final stages now, any talk of redistribution of wealth will be met by a strong opposition from the ruling class of economists.

Don’t be brow-beaten by them, and instead stand up and be counted. And be sure that wealth distribution is an idea whose time has come.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)