The second most-populated country in the world, India, has had a glorifying journey since its independence in 1947, from being a struggling economy to a $2 trillion-plus economy in 2020. But with faster population growth in the lower and middle-class segments of the society, India also has one of the largest wealth gaps in the world. The COVID-19 crisis has only made the situations worse for the middle and low-income groups.
Are the poor getting poorer?
This statement is not entirely true for the current global situation. According to a survey by Oxfam, about 82% of the total wealth generated between the second quarters of 2016 to the corresponding period in 2018 went to the top 1%. On the other hand, the bottom 50% of the global population took less than 1% of the total wealth in 2016-17. Comparing the share of wealth between all the sections, Oxfam said that the poor are not getting poorer, but their growth is almost negligible.
Now in 2020, all the statistics and estimates are being challenged. A January 2020 study by Oxfam India shows that the country’s richest 1% hold more than four times the wealth held by 953 million people forming the bottom 70% of the country’s population. Oxfam India CEO, Amitabh Behar commented on the study, “The gap between rich and poor can’t be resolved without deliberate inequality-busting policies, and too few governments are committed to these. Our broken economies are lining the pockets of billionaires and big business at the expense of ordinary men and women. No wonder people are starting to question whether billionaires should even exist.”
The pang of unemployment and job loss
Since the report is from January 2020, it does not include the harms done by the pandemic. The International Labour Organization (ILO) report predicts that about 40 crores Indians have been pushed to poverty due to the coronavirus. The plight of the migrant labourers was seen live on news channels, right in the beginning of the lockdown. Subsequently, a wave of job loss in the salaried employees left 2.1 crore people jobless in the first five months of the pandemic. Mahesh Vyas, CMIE CEO and MD, recently wrote that the biggest loss of jobs among salaried employees was of white-collar professional employees including software engineers, physicians, teachers, accountants, analysts and professional contractual employees.
Are the rich getting richer even in the pandemic?
Definitely, Some Indian billionaires like Cyrus Poonawalla, Mukesh Ambani, Radhakishan Damani got richer during the pandemic. Cyrus Poonawalla, the founder of Serum Institute of India, added $5.56 billion to his net worth this year, making the total to $14.3 billion. Mukesh Ambani, the sixth richest man in the world, made his Reliance Industries Limited (RIL) a debt-free company and also added $30.5 billion to his wealth. There are many such billionaires who are richer despite the poor economy, particularly because of the Indian stock markets. With such rates of rapid difference, India’s wealth gap is expected to widen further, leading to lower transitional GDP per capita growth.
What does the Policy Times noted?
- Even when the government has started unlocking the economy, the middle and low-income groups are seeing no respite.
- The pandemic has brought the growth of the lower and middle-class to a halt, and its reversal seems difficult in the coming years.
- With such high rates of inequality in income, the country will see lesser investments, opportunities for the middle and lower class, and further degradation of the economy.