The wealth of only 1% of people belonging to the upper echelons of the country is equal to the wealth of 70% of the poorest people! India faces this truth in 2020. One can consider this gross inequality as an abject failure on the part of the State in distributing the National Wealth… and, this responsibility, too, is historic, in a way. While formulating the directional policies of Independent India in 1947-52, the Government of Pandit Jawaharlal Nehru had tried its best to remove all sorts of inequalities. The cornerstone of the Nehruvian Model of Development was the removal of inequality. In other words, the essence of Pandit Nehru’s idea about India was equality. To achieve his goal, the first Prime Minister of India did not nationalise the country’s assets… instead, he followed the path of a Mixed Economy.
No one would deny the fact that Nehru, himself, failed to stick to his policy of removing inequality. However, Nehru’s daughter and the only female Prime Minister of India, Indira Gandhi, deserves the credit for completely distracting the South Asian Nation from the path set by her father. ‘Garibi Hatao‘ (or ‘Remove Poverty‘) was the theme and slogan of Gandhi’s 1971 election campaign. The people thought that the State, finally, would focus only on poverty alleviation! How the State viewed the issue of poverty in the next 50 years is a different issue. The fact of the matter is that the top Indian political leadership forgot the word ‘inequality‘.
There lies quite a big difference between (13th Indian Prime Minister) Dr Manmohan Singh’s ‘Rights-based approach to development‘ and his successor Narendra Modi’s ‘Trickle Down‘ approach. However, there is also a similarity between the two! Both the approaches accept the increasing inequality. The fact is: if the State follows the Trickle Down policy, then there is a possibility of widening the gap (especially if the market is not fully developed). Modi’s India witnesses this fact! Still, it would be unfair to blame PM Modi alone for this huge inequality…
Even if one accepts that there is a huge inequality in contemporary India, is there any problem with that?
Yes… there is a serious problem! Keeping in mind the current economic situation of India, this inequality or disparity is suicidal. The lack of demand has triggered a recession in India… and, the growing economic inequality has intensified the lack of demand. In case the income or wealth increases by a particular proportion, the corresponding consumption of the poorest section of people would increase more than that of the rich people. Currently, a small section of people accumulates the maximum portion of the wealth. The equal distribution of that wealth among majority of the people could increase their purchasing power, and could boost the overall demand.
One may argue that the concentration of wealth in the hands of few could boost the investment. As a result, there could also be an increase in National Income! However, India realises from its recent experience that it will not happen… and, the reason is quite clear… lack of demand in the market would not encourage business leaders to invest their money.
There is also a greater objection against the inequality. Increasing inequality is contrary to theories pertaining to development! Any definition of fairness advises the State to serve one of the basic conditions: To ensure that each and every person in the society should get an equal opportunity for development. The failure in distributing wealth equally among the people does not allow the poorest section to become self-sufficient. No Welfare State can afford this sort of situation.
One thing needs to be clarified here that the Government, and not the market, is responsible for the inequality created in India. Majority of the people enjoy the benefits of development only if the Government allows market to act freely. The Government’s failure in creating a competitive environment and also in tackling the flunkey bureaucrats has triggered the inequality. Therefore, the onus lies on the State to correct these mistakes.
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