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1% Surcharge on Richest 10% to Reduce Inequality: Oxfam India – IMPRI Impact and Policy Research Institute

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1% Surcharge on Richest 10% to Reduce Inequality: Oxfam India - IMPRI Impact and Policy Research Institute

Tikender Singh Panwar

The gap between the top 10% asset holders and the bottom 10% is 500 times in rural India but is shockingly 50,000 times in urban areas, Oxfam, the British founded confederation of 21 independent charitable organizations, reported in 2017. Oxfam India’s latest report titled ‘Inequality Kills: India Supplement 2022’ reveals far worsening inequality in the country. 

Inequality has always plagued India but it has been exacerbated by the Narendra Modi government in the last eight years. The promotion of corporate giants at the cost of public welfare is the driving force behind the increasing inequality. 

The Oxfam report exposes the government’s much-hyped hollow claims of ‘Sabka Saath, Sabka Vikas’ and meeting the universal standards of sustainable development goals. 

While the income of 84% of households declined in a year marked by loss of life and livelihoods, the number of billionaires grew from 102 to 142, the report says adding, “the collective wealth of India’s 100 richest people hit a record of Rs 57.3 lakh crore in 2021.”

The share of the bottom 50% of the population in national wealth was a mere 6% whereas, the top 10% held more than 45% of the national wealth.

inequality

According to Oxfam, the richest 98 Indians (owner of corporate entities) own the same wealth as the bottom 55.2 crore people, which is roughly 40% of the population.

Whereas India added 40 billionaires in 2020-21, the number of poor doubled during the same period with more than 4.6 crore Indians estimated to have fallen into extreme poverty—this number is nearly half of the global poor, according to the United Nations. 

The level of inequality is so stark that the wealth of India’s 10 richest is enough to fund the schooling and higher education of every child for, at least, 25 years. India is home to 25% of all world’s undernourished children.

Oxfam summarises some of the important reasons for this gross inequality. The poor expenditure on health and education, the taxation system, social sector spending, and over-centralization of the governance system are some of the important reasons for the vast inequality. 

Amitabh Behar, CEO, Oxfam India said: “The ‘Inequality Kills’ briefing shows how deeply unequal our economic system is and how it fuels not only inequality but poverty as well. We urge the government of India to commit to an economic system that creates a more equal and sustainable nation… India’s fight against inequality and poverty must be supported by the billionaires who made record profits in the country during the pandemic.”

Whereas the report focuses on the taxation system, which substantially increased in the indirect tax form—shoring up wealth from peoples’ savings—it also mentions that this is not the ultimate area that requires redressal. For inclusive, sustainable, and equitable growth, the government has to usher in a large-scale transformation which seems extremely difficult in this situation. 

The democratization of the surplus generated in a social system is the only way to meet the huge gap of inequality in a social system. Unfortunately, in the last few years, instead of democratization of the surplus generated, there has been a massive appropriation of it. And the Union government, a principal tool necessary for this democratization, has become a tool for the facilitation of appropriation by its capitalist cronies. 

For example, several countries allocate a higher portion of their budget to healthcare compared to India. Brazil allocates 9.51%, South Africa 8.25%, China 5.35%, Russia 5.32% whereas India’s budgetary allocation is only 3.54%.

“This consistently poor spending on health has also created gross inequalities in the healthcare system that have been described in past. Unsurprisingly, the poor state of public-funded healthcare in the country has pushed the majority of the population to resort to the private sector to obtain healthcare,” the report states. The drive for an insurance-driven health system helps in accruing profits for private insurers and does not help in democratizing the gains. 

Likewise, education can contribute phenomenally to either reducing or increasing the gap of inequality in a social system. Sadly, India has promoted the privatization of education in the last few years.

The report points out that the proportion of children attending a government school has declined to 45% compared to 85% in the USA, 95% in the UK 93% in Japan. The government schools are either not being run properly or being shut at a very fast pace, Oxfam states. 

Despite providing the glaring facts and their reasons, the report misses some of the important facts, especially in the urban areas, that lead to inequality.

The major miss is the transformation of utilities and urban commons for abject privatization. This goes to the basic understanding of the way cities are built to attract capital investment in sectors like housing, infrastructure, health, and even education, which has also led to the widening of inequality. For example, the government has been pushing for secondary and tertiary health infrastructure rather than primary in recent years. Therefore, when a city is planned, there is more space for super-specialty hospitals than for primary healthcare centers. Gurgaon is a classic example of such development. 

Nearly, 40% of the urban population was dependent on private healthcare in 1986-87, 68% percent in 2014, and now more than 70%, according to the report. Unfortunately, the Modi government views the health sector as an area of investment with good returns for the private sector. The ‘health industry’ is expected to grow to $372 billion.

“Reliance on private medical care risks the exclusion of socially marginalized groups from accessing healthcare thereby exacerbating existing health inequalities. A healthcare sector driven by market considerations influences consumer choice and creates demand according to profitability for the providers thus excluding those with poorer purchasing power such as those who constitute India’s marginalized groups,” according to the report.

The commodifying of certain public goods, like the supply of good-quality water, to maximize profit also increases inequality. From the World Water Forum in The Hague in March 2000, where the participants proclaimed themselves as saviors in the global water crisis but instead pronounced ideas for water privatization and its utilities in the urban spectrum.

Most of the infrastructure projects designed with high capital input bear a condition for reducing non-revenue water (NRW). There is nothing wrong with reducing NRW if it reduces the losses of water in a water utility in a city-run either by the government or a parastatal body. The problem is that people are made to pay for reducing NRW and huge amounts of surplus are generated in the process. Another problem is the business of purifying water by companies despite the fact that the utilities are supposed to provide potable water to residents.

A market-oriented housing policy increases inequality as well. The transformation of old model towns under new master plans in the last four decades speaks volumes of this private aggrandizement. 

Compared to the Master Plan for Delhi-2041, the previous plans had a provision for social housing, like Janata Flats. The new plan doesn’t mention social housing at all.

A political and social movement is the only way to implement the suggestions offered by Oxfam to remove inequality. Democratizing the surplus in the form of a larger investment by the State in education, health, etc. is necessary.

The report points out that a 4% wealth tax on 98 richest families can take care of the ministry of health and family welfare for more than two years and the Mid-Day Meal Scheme for 17 years. Similarly, just 1% wealth tax on 98 richest billionaire families can finance Ayushman Bharat for more than seven years.

The increasing inequality will lead to massive social tension which will be healthy for the country. The key issue, as pointed out by the report, is not just the management of taxes but the transformation of the social and political system.

This was first published in NewsClick Impose 1% Surcharge on Richest 10% Indians to Reduce Inequality: Oxfam India on 19 January 2022

Read another piece by Tikender Singh Panwar titled Urban Dilemma in Assembly poll-bound 5 states

Read another piece by Tikender Singh Panwar titled Bidding Farewell to 2021, Welcoming 2022 with Hope and Scepticism

Read another piece by Tikender Singh Panwar titled No Means No: Kinnaur Tribals Oppose Hydel Project to Protect Ecology

YouTube: Watch Tikender Singh Panwar at IMPRI #LocalGovernance- Innovation and Empowerment of Urban Local Bodies

About the Author

Tikender Singh Panwar is Former Deputy Mayor, Shimla; Visiting Senior Fellow, IMPRI.

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