Speeches of Union ministers, specially at the top, the Prime Minister, are prepared by highly qualified people and many announcements are made regarding what is often said the fast-paced progress of the country. However, public memory is short and the sufferings of the poor and the impoverished remain. Much hype is being created followingIndia taking over the presidency of G-20, and high expectations being raised about the forthcoming Union budget.
Recently at a conference, a Union minister released a report of consulting firm Ernest &Young, which stated that India’s economy will reach $26 trillion by 2047, the 100th year of the country’s independence. The per capita income is expected to increase to $15,000, putting the country among the ranks of developed economies, the report titled ‘[email protected]: Realising the Potential of a $26 Trillion Economy’ stated. The report underscored the growth trajectory of the Indian economy that is projected to be the highest for any large economy over the coming decades. But even if this happens, what guarantee is there that there would be equitable growth and the increased incomes would reach the bottom segments of society.
Just a few days ago, Prime Minister Narendra Modi announced that India will establish a ‘Global South Centre of Excellence’ that will undertake research and development solutions or best practices of any of the developing countries. He also announced the launch of the ‘Global South Science & Technology Initiative’ to share India’s expertise with other developing nations in space technology and nuclear energy. All this clearly reveals that more than grass-root development, these projects are taking over priority.
In such a situation, the Oxfam report found that the richest 21 Indian billionaires have more wealth than 700 million Indians. Since the pandemic began till November last year, billionaires in India have seen their wealth surge by 121 percent or Rs 3608 crore per day in real terms. While just 5 percent Indians owned over 62 percent wealth in the country in 2021, the bottom 50 percent of the population possessed merely 3 percent of the wealth, according to the report titled ‘Survival of the Richest: The India Story’. From the earlier figure was 5 percent, it has come down to 3 percent.
While the government is helping the business class on various ways, the so-called experts are against subsidies, which mostly go to the poorer sections. However, it is necessary to point out here that till date no data is available in the country regarding facilities or incentives given to businessmen to promote their products and earn higher profitability. But subsidies to the poor are always highlighted. A few years back, a Deputy Governor of the RBI had estimated that the rich consume much more benefits from the exchequer than the large number of poor and economically weaker segments of the population.
The Oxfam India CEO, Amitabh Behar pointed out that “India is unfortunately on a fast track to becoming a country only for the rich”. 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”. It has been clearly revealed in the report that the rich benefited from reduced corporate taxes, tax exemptions and other incentives, the report added. And the present government is determined to promote their interests.
To correct this disparity, there have been various suggestions to tax the rich and channel the money for social infrastructure spending, specially in health and education sectors. Now Oxfam has reiterated this and, in the section on India, asked the finance minister to implement progressive tax measures such as wealth tax in the upcoming budget.
A two percent tax on the entire wealth of India’s billionaires would support the nutrition of the country’s malnourished population for the next three years, the report stated. A one percent wealth tax could fund the National Health Mission, India’s largest healthcare scheme for more than1.5 years, it added. Taxing the top 100 Indian billionaires at 2.5 percent or taxing the top 10 Indian billionaires at 5 percent would nearly cover the entire amount required to bring an estimated 150 million children back into school, Oxfam rightly observed.
But unfortunately, the corporate tax rate has been slashed from 30 percent to 22 percent and no resultant investment boom by the private sector has been manifest. If such encouragement has not inspired the top business class, why not increase the corporate tax rate to say 28 percent or so.
If the government continues to protect the business class and does not want to tax them, development projects would have to be reduced as also welfare expenditure. Thus, if there is no enhanced – not ’adequate’, as this term is somewhat confusing — allocation for health and education or even for the rural job scheme or rural housing scheme, the economic conditions of the impoverished sections would not improve.
The Periodic Labour Force Surveys show an increase in workers engaged in agriculture between 2018-19 and 2020-21. At the same time, percentage of workers engaged in manufacturing and services declined. The rural shift of the population is clearly manifest as also fall in real incomes. Growth in nominal wages of both farm and non-farm workers has lagged behind price changes or inflation for many months. The erosion of purchasing power pinches the low-income segments far harder as they squeeze other expenditure to be able to main spending on costlier necessities such as food and health.
Meanwhile, in the present fiscal manufacturing is estimated to grow much slower this year at about one-third or one-fourth of the rate recorded last year. Export growth may be around half this year affecting products such as textiles and jewellery which are job rich. Another job-rich sector is construction that has barely risen above its pre-pandemic position after gaining some momentum last year.
Considering all these factors, specially the government’s ambitious projects, the rural infrastructure spend, particularly on health, education and housing may not be sufficient enough to bring about a real transformation. By such transformation, it is meant that the per capita income of the lowest 50 percent of the population would increase significantly. This would enable higher growth keeping in view the fact that the richest 10 percent of the population contribute just 4 percent to the nation’s goods and services tax (GST) collections while the bottom 50 percent pay 64 percent, as per the Oxfam report.
As this writer has reiterated time and again, the development strategy has to be geared towards the rural sector, specially the backward villages with the involvement of the panchayats and the voluntary organisations working at the grass-root levels. Resources are obviously a big constraint for which, taxing the rich is imperative. Moreover, tax monitoring has to be done scrupulously so that the influential corporate class as also high income professionals do not get an opportunity to show reduced incomes.—INFA