Income disparities are glaring while remedies remain elusive
Perhaps, Aladdin ka chirag is the need of the hour
The projected revenue foregone by the Union Government in 2020-21 in the form of incentives and tax exemptions to corporates was more than Rs 1,03,285.54 crore. This is the equivalent to the allocation towards Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for 16 months
For long, India has been struggling to cope with all pervasive economic disparities. Post-independence, a number of initiatives were taken to ensure an all-round inclusive development of all sections of society. However, they invariably fell short at the finish line. As a result, the gaps between haves and have-nots kept widening further and further.
The system has been such that even today, the rich are getting richer, and at a faster pace, while the poor are not becoming rich. As an effective means to bring about a semblance of order, of late the thrust has been on inclusive development, which is quite appreciable. Distribution of gainful opportunities among all sections of society is certain to boost the collective action whereby none is left behind.
There were some discordant notes when Oxfam India released its report titled ‘Survival of the Richest: The India Story’ in January. According to the report, just five per cent of Indians own more than 60 per cent of the country’s wealth while the bottom 50 per cent of the country’s population possess only three per cent of the overall wealth. It further said that India’s richest man has seen his wealth soar by 46 per cent in 2022. It shows that a one-off 20 per cent tax on this billionaire’s unrealized gains from 2017–2021 could potentially raise Rs 1.8 lakh crore. From 2012 to 2021, 40 per cent of the wealth created in India has gone to just one per cent of the population.
Experts were a divided lot but they agreed – directly or indirectly – on the need for an all-inclusive development strategy, which has also figured prominently in the Union Budget 2023-24 as one of Saptarishi goals – last mile development! There is no denying the fact that multiple challenges like hunger, unemployment, inflation, denying access to a sizeable population to quality medical and education facilities and job opportunities have made the going tougher for the policy makers. The worst of victims remain people from weaker sections of society. Any attempt from any quarters to ameliorate their woes should raw praise from all and sundry.
To quote Amitabh Behar, CEO, Oxfam India: “The country’s marginalised – Dalits, adivasis, Muslims, women and informal sector workers are continuing to suffer in a system which ensures the survival of the richest. The poor are paying disproportionately higher taxes, spending more on essential items and services when compared to the rich. The time has come to tax the rich and ensure they pay their fair share. We urge the Finance Minister to implement progressive tax measures such as wealth tax and inheritance tax which have been historically proven to be effective in tackling inequality.”
It is heartening that the Centre seems to have taken note of the plight of the poor.
Similarly, the country’s banking system demonstrates class bias when it comes to dealing with loan recovery. In Jharkhand, a 22-year-old pregnant woman was crushed under a tractor for not paying EMI of Rs 10,000. In a bizarre move, rather than protecting the poor and vulnerable from dangerous loan recovery tactics, the central bank withdrew its curbs on third party recovery agents. On the other side, loans to the tune of Rs 11.17 lakh crore that were written off by public banks benefitted only corporates. Hardly 13 per cent of this huge amount has been recovered by banks.
The report also highlights how the Union Government continues to tax the poor and middle class while going soft on the rich. Approximately 64 per cent of the total Rs 14.83 lakh crore in Goods and Services Tax (GST), came from the bottom 50 per cent of the population in 2021-22. As per estimates, 33 per cent of GST comes from the middle 40 per cent and only three per cent from the top 10 per cent. The bottom 50 per cent of the population pays six times more on indirect taxes as a percentage of income compared to the top 10 per cent.
While the poor in India are taxed more, the rich benefit from tax exemptions. In 2019, the Central Government reduced the corporate tax slabs from 30 per cent to 22 per cent, with newly incorporated companies paying a lower 15 per cent rate. The projected revenue foregone by the Union Government in 2020-21 in the form of incentives and tax exemptions to corporates was more than Rs 1,03,285.54 crore. This is the equivalent to the allocation towards Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for 16 months.
Greater taxation creates an enabling environment for governments to have resources to fund universal public services, climate adaptations and innovations. A nationwide 2021 survey by Fight Inequality Alliance India (FIA India) revealed that more than 80 per cent of people support tax on the rich and corporations, who earned record profits during the Covid-19 pandemic. More than 90 per cent of the respondents demanded budget measures to combat inequality like universal social security, right to health and expansion of budget to prevent gender-based violence.
These raise several questions. Can we tax the super-rich to reduce inequality and resuscitate democracy? How to innovate, create stronger public services, happier and healthier societies? Can the government raise taxes on capital gains? Is India getting ready to spend 12 per cent of gross domestic product (GDP) on health and education to do away with glaring disparities in the kind of education and health facilities being extended to the masses? Are we in a position to ensure workers in the formal and informal sector are paid basic minimum wages, which are essential to live a life with dignity?
These are some questions that need to be answered during the early years of Amrit Kaal. In 75 years, we have done incredibly well as a nation but certain writings on the wall need to be read with honesty and responsibility. It should be followed by an honest soul-searching exercise.
The goal of last mile development cannot be achieved without empowering masses with quality health and education facilities. The Centre and the States will have to work with a collective government approach. The super affluent among us will have to play a proactive role. Else, we may not be able to realize the goal of a happier, healthier and wealthier Bharatvarsh even in Amrit Kaal. Nothing can be more agonizing!
(The writer is a senior journalist, columnist and author. The views expressed are his personal opinions)