Articles
Income Inequality
Dt:17/4/24
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.
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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)
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