Feb 21, 2018

Oxfam India warns of sharply rising inequality in India

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Inequality in India is real and has been rising sharply for the last three decades as an unfortunate legacy of the lopsided policy choices made by successive governments, Oxfam India said today as it published a new report.

The report The Widening Gaps: India Inequality Report 2018 provides a picture of the current state of inequality in India, identifies the reasons behind this situation, and presents policy solutions.

The report busts the myth that India is a low-inequality country. On all parameters of income, consumption and wealth, India ranks among the most unequal countries in the world.

The report states that inequality is evitable in times of accelerated growth. Countries in Latin America and in East Asia have seen low and even declining inequality.   

India is one of the few outliers where inequality is already high and continues to rise sharply.    It is not accidental. Specific policy choices which favoured capital rather than labour, and favoured skilled rather than unskilled labour, are part of the structure of the growth trajectory in India.  

The report analyses various sources of data and describes how the path of inequality has changed in India—from being stagnant in the 1980s, to its increase since 1991, and to its subsequent and continued surge in recent years until 2017.

While India is one of the fastest growing economies in the world, extreme concentration of the wealth being generated is widening the gap between the marginalised and excluded groups versus the rest.

“What is particularly worrying in India’s case is that economic inequality is being added to a society that is already fractured along the lines of caste, religion, region and gender. Apart from being a moral concern, reducing inequality is central to the functioning of India’s democracy,” said Professor Himanshu, author of the report.

The report points out that the wealthiest in India have cornered a huge part of the wealth created in the country through crony capitalism and inheritance while people at the bottom are seeing their shares being reduced further.

“This report looks into multiple dimensions of inequality in India—income, wealth and consumption. No matter what measure of inequality one uses and no matter what data we draw upon, the conclusion is—inequality in the country is high and rising. These inequalities are the result of package of reforms adopted during the big bang liberalization of 1991 and the subsequent policies adopted. The only way to reverse this trend is to increase tax collection through progressive direct taxation –such as introducing wealth and inheritance taxes—and spending them on health, education and nutrition for the poor, focusing specially on the early childhood development of the poor. Only then can one hope to create a more equal opportunity country and spread the benefits of high growth more widely,” said Oxfam India CEO Nisha Agrawal.

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For media queries please contact Himanshi Matta, Media Coordinator, Oxfam India himanshi@oxfamindia.org, 91-9980182310