The inequality conundrum
What do the reports and experts say:
• The World Inequality Report said in last December that the top 10% of the Indian population had 57% of the country’s total national income in 2021, while the top 1% held 22%.
• The latest report by the Institute of Competitiveness quotes the country’s own Periodic Labour Force Survey to state that the top 1% held 6-7% and the top 10% a third of national income in 2019-20.
• The EAC-PM report said, “The share held by the top 1% is only increasing, thereby further marginalising the poor.
Logical ways to reverse the rising inequality:
• State interventions are a must to correct the economic asymmetry.
• The EAC-PM has suggested an urban counterpart to the rural employment guarantee scheme, which has been reasonably successful in containing rural distress.
o So long as the urban scheme has a strong linkage to creation of durable urban infrastructure, its economic productiveness can’t be questioned.
• Raising minimum income could be a way-out
• Making the top 1% of the income pyramid to commit more resources as tax revenues to the government and use these for scaling up public expenditure on health and education.
• Taxes on ultra-high individual incomes and wealth could be an effective instrument to propel growth
Challenges
• State interventions are a must but the question is how and at what cost.
• The idea of a universal basic income (UBI) may be fraught with grave fiscal costs, especially since explicit budget subsidies on food and fertilisers are increasingly proving to be sticky and prone to external shocks.
• Imposing wealth tax on rich people could be a challenge as it may lead to further evasion of taxes and may discourage people from earning more.
Practice Question: Occurrence of various epidemics and pandemics have exposed India’s health infrastructure. Discuss how introduction Public Health cadre could be a solution.