Inequality Kills: India Supplement 2022

Inequality Kills: India Supplement 2022

  • By Abhirr VP
  • 17 Jan, 2022

RICHEST 98 INDIANS OWN SAME WEALTH AS THE BOTTOM 55.2 CRORE PEOPLE

One percent wealth tax on 98 richest billionaire families in India can finance Ayushman Bharat, the national public health insurance fund of the Government of India for more than seven years.

New Delhi | 17 January 2022: When 84 percent of households in the country suffered a decline in their income in a year marked by tremendous loss of life and livelihoods, the number of Indian billionaires grew from 102 to 142, Oxfam India’s latest briefing ‘Inequality Kills’ has revealed. The briefing was published today, ahead of the of the World Economic Forum’s Davos Agenda. The briefing indicates that the collective wealth of India’s 100 richest people hit a record high of INR 57.3 lakh crore (USD 775 billion) in 2021.

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Amitabh Behar, CEO, Oxfam India said, “Oxfam’s global briefing points to the stark reality of inequality contributing to the death of at least 21,000 people each day, or one person every four seconds. The pandemic has set gender parity back from 99 years to now 135 years. Women collectively lost INR 59.11 lakh crore (USD 800 billion) in earnings in 2020, with 1.3 crore fewer women in work now than in 2019. It has never been so important to start righting the wrongs of this obscene inequality by targeting extreme wealth through taxation and getting that money back into the real economy to save lives.”

In India, during the pandemic (since March 2020, through to November 30th, 2021) the wealth of billionaires increased from INR 23.14 lakh crore (USD 313 billion) to INR 53.16 lakh crore (USD 719 billion). More than 4.6 crore Indians meanwhile are estimated to have fallen into extreme poverty in 2020 (nearly half of the global new poor according to the United Nations.) The stark wealth inequality in India is a result of an economic system rigged in favour of the super-rich over the poor and marginalised.

The briefing advocates a one percent surcharge on the richest 10 percent of the Indian population to fund inequality combating measures such as higher investments in school education, universal healthcare, and social security benefits like maternity leaves, paid leaves and pension for all Indians.

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 which creates a more equal and sustainable nation. India can show the world that democratic systems are capable for wealth redistribution and inclusive growth where no one is left behind. India’s fight against inequality and poverty must be supported by the billionaires who made record profits in the country during the pandemic.”

DEPENDENCE ON INDIRECT TAXES

Historically, India has always been dependent more on indirect taxes. In the year 2000 the percentage of indirect tax in the total tax revenue was at 63.69 percent. Sadly, even during the pandemic this trend continued as the government revenue remained highly dependent on the indirect taxes —especially the tax levied on the sale and manufacture of goods and services that ordinary Indians depend upon.

The Oxfam India briefing shows the trend that indirect tax as a share of the Union government revenue have been increasing at a time when there is a decline in the proportion of corporate tax for the same in last four years. The additional tax imposed on fuel has risen 33 percent in the first six months of 2020-21 as compared to last year and is 79 percent more than pre-Covid levels.

At the same time, the wealth tax for the super-rich has been abolished in 2016. Corporate taxes were lowered from 30 percent to 22 percent to attract investment last year has resulted in a loss of INR 1.5 lakh crore which has contributed to the increase in India’s fiscal deficit. These trends show that the poor, marginalised and the middle class paid high taxes despite going through the raging pandemic while the rich made more money without paying their fair share.

DECADES OF UNDERFUNDING FOR PUBLIC SERVICES

Apart from the failure of generating equitable revenue, Oxfam India’s briefing shows de-prioritization of education and health in the Union government budget when these two services were needed the most.

Allocation towards health in 2021-22 saw a decline of 10 percent from the previous year in the Union government’s budget, while the allocation towards education in 2021-22 saw an increase of 10 percent from the previous year. Health spending as a percentage of GDP has remained abysmally low at 1.2 to 1.6 percent and increased only 0.09 percent over the last 22 years. Similarly, Education spending as a percentage of GDP has remained low at 3 percent and increased only 0.07 percent over the last 18 years.

Expenditure on social security schemes for workers (under the Ministry of Labour and Employment) and the centrally sponsored scheme of National Social Assistance Programme is abysmally low at 0.6 percent of total expenditure in 2021-22, a decline from 1.5 percent of total expenditure from previous year. With 93 percent of the nation’s workforce comprising of informal employment, there has been little success in bringing them under the ambit of formal employment, which would give them various benefits like paid leaves, health insurance, paid maternity leaves and pension.

PRIVATISATION OF BASIC SERVICES DETRIMENTAL TO EQUALITY

The policy push for privatisation of healthcare and education in India are further acting as enablers of inequality in India. In a 2021 survey by Oxfam India, 52 percent of the parents who send their children to private schools reported having to pay hiked fees for the AY 2021-22. 35 percent children were prevented from accessing education due to non-payment of fees. 38 percent parents had to pay illegal charges as capitation fees at the time of admission and 57 percent parents had to pay additional charges that were not part of declared official break-up of fees. Moreover, the survey shows that parents spend a substantial part of their household income (15 percent and above) on private school fees. The growing privatisation of school education disproportionately affects country’s poor and marginalised people, particularly women and girls.

Oxfam India’s briefing shows the high cost of private healthcare continues to affect marginalised communities especially due to its high costs and further widens inequalities. Data from the National Sample Survey (NSS) (2017-18) shows that Out-of-Pocket Expenditure (OOPE) in private hospitals is almost six times of that in public hospitals for inpatient care, and two or three times higher for outpatient care. The average OOPE in India is at 62.67 percent while the global average is at 18.12 percent.

GROWING SUPPORT TO FIGHT INEQUALITY IN INDIA

Politicians, governments, civil society, academicians, and bureaucrats across the country are repeatedly stressing for the need to address high wealth inequality and its ill effects in last few years. Nobel laureate and economist Abhijit Banerjee said in October 2019 that, “inequality has grown enormously everywhere”. Banerjee, in January 2020, called for re-introduction of a wealth tax in India. He said, "Given the amount of inequality now, a wealth tax is completely sensible. And more redistribution is required".

In August 2019, the Rashtriya Swayamsevak Sangh’s (RSS) Chief Mohan Bhagwat said, “Despite tremendous economic progress, wealth of the world is being controlled by a few.”

On 15th August 2021, Kerala Chief Minister, Pinarayi Vijayan said, "As an independent nation, we have achieved many things. There is still room for improvement in many areas. Economic and social inequalities are strongly prevailing in the country. Poverty has not been eradicated”.

Andhra Pradesh Chief Minister YS Jagan Mohan Reddy in December 2021 stressed on the need to reduce income inequality as it would result in increased rural indebtedness, lower purchasing power and reduction in rural aggregate demand.

Amitabh Behar, CEO, Oxfam India said, “It’s clear from the voices across the political spectrum that India needs to address extreme inequality right now. But we need to move from mere words to taking concrete steps to end the cycle of inequality and poverty. And this is possible if the Government of India taxes the wealthy which will generate much-needed resources to fund the recovery from the pandemic.”

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RECOMMENDATIONS

Oxfam India believes the following measures should be implemented:

Recognise inequality is real and agree to measure it. India needs to track policy impact better by improving mechanisms for its measurement. There is an immediate requirement to start disaggregating more public statistics by income and introduce regular collection of data on income and wealth inequality, while ensuring that this data is made freely available in the public domain. At least two surveys should be conducted over a ten-year period, using a reasonably comparable methodology capturing income and wealth inequalities.

Redistribute India’s wealth from the super-rich to generate resources for the majority: It is time for India to reintroduce a wealth tax to generate much-needed resources to fund the recovery from the pandemic. Tax compliance by wealthy individuals must also be drastically improved, instead of imposing indirect taxes on India’s poor and middle class. Evidence shows that the threat of an audit shows the most pronounced effect on compliance and can be complemented by shaming tax evaders or by the imposition of penalties and should take precedence over a reduction in direct tax rates which has ambiguous effects on compliance and adverse effects on revenue.

Generate revenue to invest in the education and health of future generations: A temporary ONE percent surcharge on the richest 10 percent population could help raise an additional INR 8.7 lakh crore, which could be utilised to increase the education and health budget. The primary outcome of the pandemic must be a quality, publicly funded and publicly delivered healthcare system that works for all and not just the rich. A secondary outcome should be an education system which addresses the needs of everyone, not just those privileged to attend elite private schools or have access to digital technology. There is also an urgent need to improve medical infrastructure by implementing India’s patent rights charter (PRC), standardising diagnostic procedures, building rural clinics, and developing streamlined health IT systems in tandem with adopting a family-health approach, making greater investments in healthcare and training and paying frontline healthcare workers adequately.

Enact and Enforce Statutory Social Security Provisions for Informal Sector Workers: While the government is recognising gig economy workers, it also needs to focus on laying the legal groundwork of basic social sector protections for 93 percent of India’s workforce.

Change the rules and shift the power in the economy and society: It is time to reverse social and economic policies that have contributed to the poor development outcomes for India’s marginalised communities. It is time to reverse privatisation and commercialisation of public services, address jobless growth and bring back stronger social protection measures for India’s informal sector workers.

NOTES TO EDITOR

DEVELOPMENT SCHEMES WHICH INDIA CAN FUND WITH WEALTH TAX ON THE RICH

  • Four percent of tax on wealth on the 98 billionaires can take care of Mid-Day- Meal programme of the country for 17 years or Samagra Sikshya Abhiyan for 6 years.
  • One percent wealth tax on 98 richest billionaire families would finance Ayushman Bharat for more than seven years.
  • One percent of tax on wealth of the 98 billionaires in India can take care of the total expenditure for the school education and literacy.
  • Four percent tax on wealth on the 98 billionaires would be enough to fund the Mission POSHAN 2.0 (includes Anganwadi Services, POSHAN Abhiyan, Scheme for Adolescent Girls, and National Creche Scheme) for 10 years
  • India’s 2021 budget allocation for the Ministry of Women and Child Development is less than half of the total accumulated wealth of the bottom ten of India’s billionaire list. Just a 2 percent tax on individuals with an income of over 10 crores could increase the Ministry’s budget by an astounding 121 percent.
  • If the wealth of the first hundred billionaires is accumulated, they could fund the National Rural Livelihood Mission scheme, responsible for creating Self Help Groups for women, for the next 365 years.

For more information, contact Abhirr VP: +91 97399 81606

About Oxfam India

Oxfam India is a movement of people working to end discrimination and create a free and just society. We work to ensure that Adivasis, Dalits, Muslims, and women and girls have safe violence-free lives with freedom to speak their mind, equal opportunities to realize their rights, and a discrimination-free future.

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