**Food for thought: **
How many of us have watched ‘Parasite’? If not, then please watch it because for the first time a foreign language film has won the Academy Award for the Best Picture.
This must make you curious. What is so special in this movie?
No doubt that this movie has some of the best actors and technicians and the director. But as per media reports, what caught the attention of jury is the ‘inequality of society’, Korean society to be precise, as displayed in this movie. Perhaps, Jury members, who are mostly Americans compared it with the inequality in their own society and were much moved by the scenes and the script of this movie. The article shared above gives the comparative picture of inequality in South Korea and USA.
I was reading it last night and decided to find relevant data for India. As per the latest report (Jan 2020) of Oxfam on Inequality in India, top 1% Indians own 42.5% of the wealth in the country and bottom 50% own 2.8% of total wealth. Much more alarming than inequality in Korea or USA!
And what’s happening to inequality over time? Well, last year 73% of all the wealth generated in the country went to top 1% Indians!
So India is not only dangerously unequal but this inequality is also rising rapidly. While ‘wealth’ is a figure which captures cumulative asset of a person, ‘income’ on the other hand is the constant stream which adds to wealth every year. So inequality is measured in both, wealth as well as income. Wealth inequality gives the overall picture at any given time while income inequality tells a lot about what’s happening with the overall inequality with time, i.e., whether it’s rising, declining or being constant.
In 1983, total income going to top 1% of the country was 6% of the total income generated in the country in a year. This share has been rising ever since. In 2012, total income going to top 1% of the country was 22% of the total income generated. (based on studies of Chancel and Piketty - I expect Piketty to get Nobel in Economics within next 10 years).
So basically a highly unequal society is becoming more and more unequal over time. Oxfam has developed an Index to measure the efforts taken by governments to reduce inequality. Not surprisingly, out of 157 countries India ranks bottom 11th in its efforts to reduce inequality.
Let me change the language from Economics to daily life to understand it better. How do we know whether Govt is making efforts? We look at the annual Budget. We look at the economic policies. We look at the monetary policies, i.e. interest rate on loans.
We saw that top 1% of Indians are cornering ever increasing share of income every year. Now let’s see why such a trend instead of reversing is getting stronger with time.
In December 2019, Govt of India reduced the Corporate tax rate (this is a tax on profit) from 30% to 22%.
GST rate charged by most of the swanky restaurants in India is only 5% or 12%. Such restaurants are visited and patronised mostly by the top 10% income earners in the country.
Cumulative public spending on Health is 1% of GDP. We know how inadequate this public spending is. Most Indians do not have access to reliable and affordable health care. There are very few government run hospitals and all of them are understaffed, poorly managed and extremely dirty. Therefore even poor people prefer to go to private doctors. A poor person falls in poverty trap when he/she or any of their family member falls sick. They fall in this trap because they can get healthcare only when the spend out of pocket. So why will poverty and inequality not rise in such a society? I read somewhere that in a broken economies like India rich are getting very rich at the cost of poor! Think of this poor sick lady and think of Appolo, Max, Vedanta in the same frame. What do you see?
Similarly government spending on education is 2.7% of GDP. Not only normal developing countries but also countries of sub-Saharan Africa are spending more on education these days. So naturally you can’t expect the kids of Dalits, kids of traditional forest dwelling Aboriginal tribals, kids of repressed EBC people and kids of poor OBC people to join the ranks of Tharoor or Nadella. And if some such poor kids like Kanhaiya Kumar manage to go to school and pass school examinations and enter JNU for PhD then they are derided by the entire nation as their education is a burden on poor taxpayers of the country! Is cost of education really a burden on us?
We have been made to think like this because for us education has always been paid. We haven’t seen free education so we feel that universities like JNU are burden on the country. Ladies & Gentlemen, we need hundreds of universities like JNU in this country. We need all state governments to spend a large share of their budget on school education. We need State to spend on Health and provide free and reliable healthcare. We need solutions like Mohalla Clinic in every village of this country.
India is poor and unequal. State needs to provide free and quality education and healthcare to all its citizen to lessen the pain of poverty. And State needs to tax more progressively to address the problem of Inequality.
How many of us have watched ‘Parasite’? If not, then please watch it because for the first time a foreign language film has won the Academy Award for the Best Picture.
This must make you curious. What is so special in this movie?
No doubt that this movie has some of the best actors and technicians and the director. But as per media reports, what caught the attention of jury is the ‘inequality of society’, Korean society to be precise, as displayed in this movie. Perhaps, Jury members, who are mostly Americans compared it with the inequality in their own society and were much moved by the scenes and the script of this movie. The article shared above gives the comparative picture of inequality in South Korea and USA.
I was reading it last night and decided to find relevant data for India. As per the latest report (Jan 2020) of Oxfam on Inequality in India, top 1% Indians own 42.5% of the wealth in the country and bottom 50% own 2.8% of total wealth. Much more alarming than inequality in Korea or USA!
And what’s happening to inequality over time? Well, last year 73% of all the wealth generated in the country went to top 1% Indians!
So India is not only dangerously unequal but this inequality is also rising rapidly. While ‘wealth’ is a figure which captures cumulative asset of a person, ‘income’ on the other hand is the constant stream which adds to wealth every year. So inequality is measured in both, wealth as well as income. Wealth inequality gives the overall picture at any given time while income inequality tells a lot about what’s happening with the overall inequality with time, i.e., whether it’s rising, declining or being constant.
In 1983, total income going to top 1% of the country was 6% of the total income generated in the country in a year. This share has been rising ever since. In 2012, total income going to top 1% of the country was 22% of the total income generated. (based on studies of Chancel and Piketty - I expect Piketty to get Nobel in Economics within next 10 years).
So basically a highly unequal society is becoming more and more unequal over time. Oxfam has developed an Index to measure the efforts taken by governments to reduce inequality. Not surprisingly, out of 157 countries India ranks bottom 11th in its efforts to reduce inequality.
Let me change the language from Economics to daily life to understand it better. How do we know whether Govt is making efforts? We look at the annual Budget. We look at the economic policies. We look at the monetary policies, i.e. interest rate on loans.
We saw that top 1% of Indians are cornering ever increasing share of income every year. Now let’s see why such a trend instead of reversing is getting stronger with time.
In December 2019, Govt of India reduced the Corporate tax rate (this is a tax on profit) from 30% to 22%.
GST rate charged by most of the swanky restaurants in India is only 5% or 12%. Such restaurants are visited and patronised mostly by the top 10% income earners in the country.
Cumulative public spending on Health is 1% of GDP. We know how inadequate this public spending is. Most Indians do not have access to reliable and affordable health care. There are very few government run hospitals and all of them are understaffed, poorly managed and extremely dirty. Therefore even poor people prefer to go to private doctors. A poor person falls in poverty trap when he/she or any of their family member falls sick. They fall in this trap because they can get healthcare only when the spend out of pocket. So why will poverty and inequality not rise in such a society? I read somewhere that in a broken economies like India rich are getting very rich at the cost of poor! Think of this poor sick lady and think of Appolo, Max, Vedanta in the same frame. What do you see?
Similarly government spending on education is 2.7% of GDP. Not only normal developing countries but also countries of sub-Saharan Africa are spending more on education these days. So naturally you can’t expect the kids of Dalits, kids of traditional forest dwelling Aboriginal tribals, kids of repressed EBC people and kids of poor OBC people to join the ranks of Tharoor or Nadella. And if some such poor kids like Kanhaiya Kumar manage to go to school and pass school examinations and enter JNU for PhD then they are derided by the entire nation as their education is a burden on poor taxpayers of the country! Is cost of education really a burden on us?
We have been made to think like this because for us education has always been paid. We haven’t seen free education so we feel that universities like JNU are burden on the country. Ladies & Gentlemen, we need hundreds of universities like JNU in this country. We need all state governments to spend a large share of their budget on school education. We need State to spend on Health and provide free and reliable healthcare. We need solutions like Mohalla Clinic in every village of this country.
India is poor and unequal. State needs to provide free and quality education and healthcare to all its citizen to lessen the pain of poverty. And State needs to tax more progressively to address the problem of Inequality.
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