Pavan K. Varma | Our inequality is inherited, curable only by solid policy

Sam Pitroda’s comments on inheritance tax were unwarranted and unnecessary, and the BJP is, predictably, using it to maximum advantage. Mr Pitroda should have realised that in election season, any loosely made remark, would be ammunition for the aware alert BJP. In any case, simplistic redistribution, and attacking wealth creators, is not the solution to inequality, because the problem is systemic, and requires more than robbing Peter to pay Paul.

But economic inequality in our nation is a very serious problem, and sometimes I wonder if we as a people are more predisposed than others to accept it. All nations have discrepancies in wealth and status. But in India, do we accept it more readily, but even in some ways justify it? 

I ask these questions because many foreigners, who are otherwise great admirers of India and its civilisational refinements, have shared with me, almost unanimously, one observation:  Why are well to do Indians so insensitive to the pervasive poverty around them? Why do the privileged take deprivation for granted? It appears that the poor, for them, are invisible. In my book, The Great Indian Middle Class (translated also into Hindi by veteran journalist Abhay Dubey, Bhartiya Madhya Varg ki Ajeeb Dastaan), I have dwelt at length on this social insensitivity.

What could be the reasons behind this? I think that for a millennium, at the least, we have socially been an extremely hierarchical society. The caste system, earlier conceived as an occupational differentiation, congealed later into an institutional system of exploitation, oppression and discrimination of the lower castes, especially the dalits. The powerful even conjured religious justification for this by selectively quoting from our Dharma Shastras, including the Manusmriti. The stranglehold of this blatantly inequitable system has lessened today due to democratic empowerment, but still exists widely, and everyday there are reports of Dalit men beaten up — or killed — by upper castes, for “defiling” food or water, or even for riding a horse or wearing a moustache, and of dalit women being raped or assaulted. 

The same indifference to inequity is reflected in our economic life. The middle class takes pride that India has today the third largest number of dollar billionaires in the world, but it overlooks the fact that about 60 per cent of our population — or roughly one billion people — lives on less than Rs 250 a day, and 21 per cent, or about 250 million people, on less than Rs 150 a day. We rightfully celebrate that India is the fastest growing major economy of the world, but are perhaps indifferent about how this increase in GDP is distributed. In the period 1990 to 2024, India has moved to become the fifth largest economy in the world and is aspiring to be the third largest — again a matter of pride — but in per capita terms its global position has barely inched upwards from 161 to 159. By contrast, China which is the second largest economy, has seen its per capital income catapult from the 158th position to 75.     

India today is perhaps the most economically unequal nation in the world. The top one per cent of the economic cake owns 40.1 per cent of the national wealth, and 22.6 per cent of incomes, perhaps the highest disproportionate concentration of wealth in the world. The top 10 per cent hold 77 per cent of the wealth. At the same time, the bottom 50 per cent of the pyramid, has, as per reports, seen barely a one per cent increase in their incomes. In the Global Hunger Index, India ranks at an abysmal 111 out of 125 countries. The government has criticised the methodology of this Index, but the fact remains that 80 per cent of our population is still surviving on a monthly food dole given by the government. 

The Niti Aayog claims that between 2015 and 2024, some 135 million people have been lifted out of poverty. This is a creditable achievement. But there is considerable debate on what is the BPL — Below Poverty Line — and even if some are redeemed above it, they form the “precariat”, those precariously on the edge of poverty. One illness in the family, a wedding, or an educational expense, and the family dips back below the BPL. 

Is this degree of inequality in a democracy sustainable? Wealth creators must be respected, but the wealth-less cannot be ignored. The worst part is the attitudinal indifference. The privileged emerge from glitzy malls, expensive restaurants, and showy shops to enter their airconditioned cars, without noticing the homeless on the pavement or living under over-bridges. There is a feeling that these two India’s can coexist forever, in watertight compartments. But the truth is that the successful cannot secede to form their own Republic. They cannot insulate themselves in gated communities in perpetuity, especially when next to almost every affluent residential area is a slum, which provides the labour to the privileged. The middle class is largely envious of the rich and disdainful of the poor. It wants the lifestyle of the rich, but would be the happiest if the country could be sanitised of the poor. But how? Delhi and Mumbai, as per a reply given by the government in Parliament in December 2022, have 650 and 2,400 slums, respectively. Can we just ‘invisibilise’ them?

It is true that solutions to the inequality syndrome are not easy. But to gloss over the problem, or minimise it, is a serious mistake. We have to finetune and even radically change our policies. We have to focus much more on agriculture — where the overwhelming number of our population lives — to make it more productive, and invest in downstream industries like food processing, warehouses, cold storages, marketing innovations, and distribution networks. The unemployment and under-employment in the agricultural sector need a vibrant manufacturing sector, and far greater emphasis on skill development. We have to create jobs, and keep inflation of food items and essential commodities in control. Policy changes are the need of the hour. Merely castigating the entrepreneurship of wealth creators, and mooting schemes like the inheritance tax, is not the solution.