10 February 2024 – The Indian Express

India’s trajectory of recent economic growth

• The President of the World Economic Forum recently praised India, projecting it to become a $10 trillion economy in the future. Nevertheless, while India’s economy continues to grow, not everyone is benefiting from this development, especially the disadvantaged.
• India is becoming more and more concerned about the all-encompassing focus on economic growth. To guarantee more inclusive growth, policy changes and increased government action are urgently needed.

What has been India’s trajectory of recent economic growth?

• FY 2022–2023: Strong private consumption, particularly among higher-income earners, strong domestic demand, and government-encouraged infrastructure investment all contributed to India’s real GDP growth, which was expected to be 6.9%.
• FY 2023/24: Real GDP growth in 2023–24 is projected to be 7.3%, up from 7.2% in 2022–23. India is currently ranked fifth globally in terms of GDP, with a reported $3.7 trillion, a considerable rise from its ranking as the tenth largest economy a decade ago with a GDP of $1.9 trillion.

Upcoming prospects:

• By 2030, the Indian economy is expected to reach $7.3 trillion, and by 2035, it is expected to reach $10 trillion (Centre for Economics and Business Research).
• The goal that the Indian government has set for itself is to become a “developed country” by 2047.

What Are the Trends of Inequality in India?

• In terms of wealth inequality, India ranks among the most unequal nations in the world, with the richest 10% of the population controlling 77% of the nation’s total wealth, the richest 1% owning 53%, and the poorer half vying for just 4.1%.
• Income inequality: India is one of the most unequal countries in the world, with the top 10% and top 1% of the population controlling 57% and 22% of the country’s total income, respectively, while the proportion of the bottom 50% has decreased to 13%, according to the World Inequality Report 2022.
• Tax Burden on the Poor: Of the nation’s goods and services tax (GST), 64% was borne by the poorest 50% of the population, and only 4% by the richest 10%.
• Healthcare is Luxury: per year, 63 million Indians, or nearly two people per second, are forced into poverty due to the high price of healthcare. Many common Indians are unable to obtain the necessary medical care.
• The Global Status of Food Security and Nutrition, 2023: Approximately 74% of Indians lacked access to a healthy food, and 39% did not get enough nutrients in their diet.
• India has a 2023 Global Hunger Index (GHI) score of 28.7, which is serious per the GHI Severity of Hunger Scale.
• With 18.7 percent, India had the highest rate of child wasting in the survey.
• Gender Inequality: India’s persistent problem of “missing women” from the workforce is a wicked problem. The country was rated 127th out of 146 countries in the Global Gender Gap Report, 2023.

Why is inequality rising in India even if the country’s economy is growing quickly?

• Concentration of Wealth: Because the wealthy can pass on benefits to their offspring, a concentration of wealth in the hands of a small number of people can sustain inequality over generations.
• Insufficient Land Reforms: Insufficient land reforms can leave a large segment of the population without access to land or with insufficient land, leaving them exposed to poverty and unstable economies.
• Crony capitalism: Favouritism and corrupt activities can lead to the accumulation of wealth among a chosen few, hence exacerbating inequality.

Absence of Policies for Inclusive Growth:

• Uneven Distribution of Economic Gains: When there is economic growth, some industries or income groups may profit excessively, which can cause an unequal distribution of wealth.
• Income inequality can be exacerbated by regressive tax policies, which are those that favour the wealthy or lack progressivity.
• Absence of Social Safety Nets: Inadequate welfare and social safety net programmes may deprive disadvantaged groups of necessary assistance, hence exacerbating the wealth disparity.

Insufficient Labour Laws:

• Financialization of the Economy: The financial sector may see a concentration of wealth if it places a greater focus on financial markets and encourages speculation over profitable investments.
• Wage disparities: The income disparity may be widened by informal labour markets that offer lower pay and fewer benefits to skilled and unskilled workers.
• No Minimum Wages: Inadequate minimum wage laws and restricted collective bargaining rights are two examples of weak labour market policies that can exacerbate income inequality.

Social Isolation:

• Caste Discrimination: By marginalising particular groups and restricting their access to opportunities, resources, and advantages, social exclusion based on caste has contributed significantly to the rise in inequality in India.
• Gender Inequality: Pay discrepancies and unequal access to job opportunities can result from discrimination based on gender.
• Lack of Education: Inequalities in access to high-quality education restricted prospects for career advancement, exacerbating already-existing inequalities.
• technical Deprivation: Automation and technical improvements increase economic inequality by displacing workers and stagnating wages for some groups.

What Actions Need to Be Taken in India to Achieve Inclusive Growth?

Promote an Inclusive Environment:

• Enforce Constitutional Provision: Government initiatives designed to reinforce these rights must be strictly implemented in order to enforce the constitutional guarantee of equality as entrenched in fundamental rights.
• Progressive Taxation: By making sure that those with higher incomes pay a larger share of their income in taxes, progressive taxation can be implemented in India to assist minimise income disparity.
• The National Health Mission, India’s largest healthcare programme, can be funded with a 1% wealth tax on billionaires in the country.
• A 2% tax on India’s billionaires will fund three years’ worth of malnutrition assistance for the country’s underprivileged.
• Empower local self-governments, include marginalised communities in decision-making processes, and promote inclusive governance by lowering corruption, increasing transparency, and boosting citizen involvement.
• Encourage private enterprises to invest in social sectors and support community development projects. Promote corporate social responsibility (CSR) activities that centre on inclusive development.

Expand the Accessibility of Basic Needs:

• Universal Access to Public Services: Inequality can be significantly decreased by guaranteeing that everyone has access to publicly funded, high-quality services including social security benefits, public health and education, and employment guarantee programmes.
• Employment Creation: While the service industry typically helps the middle class in cities, India’s labor-intensive industrial sector has the capacity to employ millions of people who are quitting farming.
• Women Empowerment: To empower women socially and economically, advance gender equality in the workplace, in school, and in entrepreneurship.

Financial and Social Inclusion:

• Implement land reforms to ensure a just and equitable allocation of land resources and to resolve concerns related to land ownership and tenancy.
• Developing Civil Society: Give historically marginalised and oppressed groups more voice by, among other things, facilitating the formation of civil society organisations within these groups, such as unions and associations.
• Technology and Innovation: Take use of new developments in technology to open up new doors for everyone.
• Make sure that society as a whole benefits from technical advancements in numerous ways.
• India may become a more equitable society by adopting and putting into practice inclusive policies that address the root causes of inequality. This transformative approach is in line with the goals of the Sustainable Development Goal 10 of the United Nations.