Memoranda for Submission to the Chief Ministers of the Two Telugu States.


Income Inequality


Income Inequality


Dr T.H.Chowdary*



The Paris - based  World Inequality Lab’s  recent (March 2024) report that   inequality  has been considerably  increasing in India of late, should  not surprise any discerning and thinking persons. Deng Tsiao Ping ( 22 Aug 1904 – 19 Feb 1997) the famous liberalizer and supreme leader of  post- Mao Tse Tung  China famously observed that,  “some  people have  to become   rich before poverty  can be reduced or eliminated.  The  directive principles in Part-IV, Article- 38 to 51 of our constitution says  that  “inequality  should be reduced” . In Bharat ,  there is a maha vakya Daridra Narayan which equates the poor  to Narayan,  God almighty.  Jesus Christ  said that, “the poor will inherit the earth” . It is  therefore obvious that poverty has been there  since the learned and the caring leaders started expressing about  the well- being of the people.


2. In 2014,  I  gave a  presentation about Development and Inequality  to several audiences. Therein I showed that  liberalization of the  Indian economy by Prime Minister P V Narasimha  Rao during  1991-96  has  unleashed the entrepreneurial  abilities  of the  Indian  elite . Pliny the  Roman historian had  as long ago as in 76 AD observed that “ India was becoming the sink of the  world’s gold”. That meant that  India was exporting superbly and  was getting payments in gold . So India was a very rich country.


3. India  became  poor because  of   the invader Islamist rule for over 600 years followed by the  rule of the   imperial British for 190 years.  These foreign rulers destroyed  the entrepreneurial prowess of  Bharatiyas  to create wealth and that led to wide-spread poverty.  



4. The education levels in India had been sadly low for very long. It is only  a small percentage of people who had modern education  in science & technology,  especially in business management .  The  Nehru-Indira  brand of socialism  resulted in poor GDP growth. In the  famous words of the great intellectual  Nani Palkhiwala:


·         The sleeping sickness of socialism is now universally acknowledged – but not officially in India….. The public sector enterprises are the black holes, the money guzzlers and they have been extracting an exorbitant price for India’s doctrinaire socialism.


·         Over- taxation corrupted the national character overtly.  That nation survived only because the tax system continued to breathe through loopholes and the economy used to breathe through window of tax evasion.



5. The Nehruvian -Indira socialism   characterized by its  critics as  permit-license-quota raj led to  a very low rate of  growth of the  GDP below 3.5%.   It is only those  who  manipulated the   permit-license-quota  socialism  became rich and richer  and super rich . The socialism - sloganeering and garbi hatao shouting Indira Gandhi  introduced  a  97.5%  income tax in 1973. It led to  the wise saying to the income tax officers, “ you take my income  and give me the tax”.  


6. The income inequality   increase is,  because it is only the highly educated and entrepreneurial few who  immediately benefit   by the liberalised economic and industrial policies and the  end to the  permit-license-quota raj. Further, the  world class Indian Institutes of  Technology ( IITs) and Indian Institutes of Management (IIMs) have been producing world class  entrepreneurs.  In the  US  a large number of Indians  have become  CEOs,  entrepreneurs and business - men. The  per capita income  in the US  used to be  the highest for  Jews . Of late, they are overtaken by  Indians.  Within India those who are having the  high quality foreign university education  and   are born into rich families are  becoming richer. Eg: The  rise and rise of the  Ambanis and the top  business families in India is the  outcome.


7. Should we feel sad and angry for  some  becoming super- rich and the  increasing  inequality ? The inequality  can be  reduced  if   there is  improvement in the  quality of  education  and  curtailment of the  runaway increase in population especially among   a particular  minority  and the   poor in the  majority . This can be done only by following the  Chinese model of  adjusting the  rate of  growth of population to the  GDP and its rate of growth  and the  country’s ambition  to be rich, richer, powerful and super- powerful . There is no use in  breast beating about the increase in inequality.  Forward looking  and  national will to become  prosperous, powerful, intellectual  and ethical  must be promoted.  The examples of  Singapore and China  are most educative in this respect. China has become the  world’s second largest economy (after the USA) and  Singapore once a coolie country becoming super rich  is due to enlightened   leadership







8.  It is as well to recall some wise words like ,


For forms of  government let the fools contend what is administered  best is best . 


“ It is glorious to be rich”.


“Some people have to become rich before poverty could  be eliminated…”


“It does not matter whether the cat is black or white as long as it can catch the rats…”


All these great ideas are  of Deng Xiao Ping, China’s liberalizer in the 1970s.  China revised its National Population Policy of the  early 1970s  twice later ( one child, two and three children)



9. The run—away growth in population,  especially among certain sections  can be controlled by restricting  the freebies  like rations  ( to over 800 mln now) , direct bank transfers  of  states’ money  in the name of  social justice  etc.,  to families with only one -child  and withdrawing  the freebies and concessions ,  the moment  the second child is born.   This norm  for the  number of children  may be revised  as the  GDP and per capita income  increase,  as in China .   Rising demography  is dividend when it is so many  developed brains . It is a disaster  if these  only so many mouths to feed ,  so many bodies to clothe and nourish  and families to house.


10. Article-39C of our Constitution is one of the  directive principles.  It states, “that the operation of the economic system does not result in the concentration of wealth  and means of production to the common detriment …”  . Our  political leaders  and governments  should honestly strive to realise this just  and great ideal.



Nehru on Constitution:


Jawaharlal  Nehru  had  Art-39 altered  when the Zamindari Abolition Acts were thrown out by the  Supreme Court.  In this context he wrote to the  Chief  Minister : A constitution must be held in respect , “but if it is ceases to represent or comes in the  way of the  age or the powerful urges of the people ,  then difficulties and  conflicts arise .  It is wise therefore we have not only stability and fixity of purpose but also  a certain flexibility and pliability  in a Constitution”.


(1118 words)