‘Billionaire Raj’ is pushing India toward autocracy
Why In News:
According to the new study by the World Inequality Lab, “the ‘Billionaire Raj’ headed by India’s modern bourgeoisie is now more unequal than the British Raj headed by the colonialist forces.”
Key Points:
- India’s soaring income inequality is now among the highest in the world.
- The gap between the haves and have-nots is starker than in the US, Brazil and South Africa, and worse than in the country’s own history under foreign rule.
- The report, which spans a century, shines a spotlight on 2014-2022, the first eight years of rule by the right-wing Bharatiya Janata Party.
Key observation of study:
- With BJP seeking a third term in the upcoming general elections, the researchers corroborate something that’s been evident to economists for some time.
- While inequality has grown since the 1980s, in step with a lopsided distribution of gains from globalization across the world, has spawned a tiny class of super-rich.
- Fewer than 10,000 individuals in a population of 9,200 lakh adults earn an average Rs 48 crore, more than 2,000 times the average income of around Rs 2,33,415.
- Nine out of 10 Indians earn less than the average.
- The studies years have been exceptionally generous to the affluent. Those at the very top of the pyramid saw their real income double.
- That surge has been four times faster than the growth enjoyed by the median earner.
- At the 99.99 percent percentile mark of the distribution, wealth increased by 175 percent, compared with 50 percent at the midpoint.
- A handful of tycoons — such as Mukesh Ambani, Gautam Adani and Sajjan Jindal — have entered the leagues of the world’s richest people.
- They did so not by putting innovative products and services in global markets, but by carving up domestic industries such as transportation, telecom, power and gas, metals, retail, media and new energy.
- According to the study, the BJP government rewarded large businesses with tax cuts and awarded them prized monopoly assets like airports.
- The billionaires got juicy deals when buying bankrupt firms and lobbied — often successfully — for protectionist trade policies.
- At the same time, India’s rules on foreign direct investment protected the national team from muscular global rivals.
- None of this trickled down to workers: The share of manufacturing, which could have created jobs for the bulging youth population, has shrunk to 13 percent of the overall output, compared with 28 percent in China.
- This is despite Rs 2,00,070 crore in subsidies for investors putting up factories to cut their reliance on the People’s Republic. Real, or inflation-adjusted, wages have been stagnant for a decade.
- Startups mushroomed as a result of digitization and cheap money during the pandemic.
- But they only created a tiny cohort of paper billionaires — and a large army of gig workers.
- With two out of five young college graduates out of work, India’s employment crisis is acute.
- And yet the mainstream media, dominated by rich business groups, refuses to cover protests by desperate youth demanding government jobs. The state-run railway network is badly understaffed.
- Regular army recruitment has been replaced by tours of duty from which 75 percent of soldiers would be demobilized after four years, a sorry experiment that might only produce combat-trained mercenaries for global warfare and security guards for the private sector.
- Young people are lining up for jobs in Israel, or getting lured by agents to fight in the Russia-Ukraine war.
- Farmers are restive about unviability of crop production amid rapid climate change.
Analysis of the study:
- The rich have funneled Rs 12,504 crore to the BJP — 58 percent of all known political funding since 2018 — according to an analysis by a consortium of media organizations and independent journalists.
- It’s reasonable to assume that the wealthy are seeking to advance their interests.
- A chunk of these donations, transferred anonymously via bearer bonds, is currently causing grief to the government and its backers.
- The Supreme Court has declared the bonds as unconstitutional and forced disclosures, despite all efforts by the state and business interests to keep voters from knowing who gave money to whom.
- But the discomfiture of the rich is not the issue. What’s more worrying is their cynical confidence. They seem to believe that the broader electorate has been so polarized along religious lines that voters won’t care about even the most egregious quid pro quo between politics and business.
- After all, the poor are receiving some state funds in their bank accounts as subsidies for shelter, cooking gas, and toilets. Almost 80 crore Indians are now on a monthly ration of free food.
- This will be the first national election since the V-Dem Institute, an independent research unit at the University of Gothenburg in Sweden, classified India as an “electoral autocracy” in 2021.
- A ninth straight year of gains in benchmark indexes will attract both domestic savings and global liquidity.
- This is important because when we consider the top 10 percent of the population, the Chinese are slightly ahead of Indians — in control of 70 percent of national wealth, according to the inequality report.
Conclusion:
The report shows that from 2014 to 2021 Indian rich persons become more rich and poor become more poor. But in terms of economic growth and investment India has taken a huge stride. Hence a comprehensive approach is needed for the sustainable development of the country.
