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Mainstream, VOL LX No 8, New Delhi, February 12, 2022

Inequality – the Virus that Kills Virtues of Society | S S Sangwan

Saturday 12 February 2022

by S S Sangwan

The virus of inequality has not only survived but amplified itself even during the Covid period, says the Oxfam Report released on 16 January 2022 by the Consortium of 21 International Charitable Organisations. The report was presented ahead of the World Economic Forum’s Davos Agenda to highlight the issue. Its data shows that from March 2020 to November 2021, the virus of inequality has grown beyond the limit and it has been aptly titled ‘Inequality kills’. Globally, the wealth of the top 10 rich has doubled during the period. The Forbes Billionaires report for October 2021 reports has also pointed out that more than 80 % of them increased their net worth over 2021. As per the Oxfam ‘India Supplement 2022’, the number of Billionaires in India has increased from 102 in 2020 to 142 in 2021 wherein the wealth of Gautam Adani has increased eight times and that of Mukesh Ambani has doubled. As per the estimates by the Center for Economic data and analysis at Ashoka University (CEDA); the country’s middle-income population shrunk by 32 million, the poverty headline count which had declined from 340 million in 2011 to 78 million in 2019, has again increased 134 million in 2020 which is a reversal of India’s fight against poverty.

The demon of inequality is causing biased access to resources, health, education, employment, and the deteriorating environment and even social ethos and values. The Billionaires may change in policies and allocations in their favour by funding the political parties. It is giving impetus to crony capitalism. The social impact of inequality can be well explained through a Sanskrit Niti Shloka. Yauvanam dhana sampattih prabhutvamavivekitaa, Ekaikamapyanarthaaya kimu yatra chatushthayam (यौवनं धन संपत्तिः प्रभुत्वमविवेकता एकैकमप्यनर्थाय किमु यत्र चतुष्ठयम्). It means excess accumulation of any one of muscle power (youth), wealth, authority, lack of knowledge; orient a person /family towards evils. If all the four are with a person/family then it may result in its doomsday. A person earning income through mental and physical work in life will never be wicked for the society but if an undeserving person inherits wealth without hard work, he will certainly indulge in corrupt practices, immoral acts, and violence even against their own?

This virus of inequality has to be checked otherwise it will kill the virtues of the society. Reduction in inequality may require a two-pronged strategy. First, higher allocation may be made in the facilities which benefit the poor viz.; government schools, hospitals, public transport, the public distribution system, and social security. It is well documented that expenses on illness in a family without government service ruins it beyond revival. Further, the hefty fees in private schools are taking about one-third income of low-income families. Therefore, quality education in government schools will not only save the expenditure of the poor families but make them employable too. Besides, these facilities will neutralize inflation for those whose wages and income are not linked with any dearness allowance.

The second related issue will be the mobilization of resources for welfare measures. Over time especially after the implementation of GST and reduction in corporate tax, the government has been becoming more dependent on indirect taxes. It means more taxing of the lower-income sections of the society. Whereas, most of the stabilized developed countries are increasing direct tax through the wealth tax or inheritance tax or both to check their inequality. The wealth tax is levied annually on a person’s wealth (cash bank deposits, real estate, etc) after an exemption limit while the inheritance tax or estate duty is levied on the death of a person after an exemption limit. The illustrate; the highest wealth tax is in Portugal 61.3%, Slovenia 61.1%, Belgium 58.4%, France 2.166 and Spain 2.618% with an average of around 2 percent in big countries. Similarly, the inheritance tax is levied on the market value of the property or assets at the time of death of a person after deduction of liabilities and exemption. The inheritance tax is as high as 55 % in Japan, 50 % in South Korea, France 45%, 40 % in the U.K, United States 40%, and Germany 30%.

Whereas, India has abolished both of the above taxes. The estate duty introduced in 1953 was abolished in 1985 when VP Singh was the Finance Minister (FM) of Congress. The virus of inequality is being provided favourable policy environment to flourish especially since 1991. Though its impact was realized by the socialist leader and then FM Madhu Dandvate when he presented the Central -budget of 1991 with the words, “a vast majority of poor people are suffering silently while a few are living in splendid isolation”. But no concrete policy was adopted to bridge the gap between the rich and poor. Even the wealth Tax was abolished in 2016 when Arun Jately was FM of BJP. There are academic discussions before each budget but the government has not dared to bring any of the tax. The present Central Government known for bold decisions like demonetization and GST may give serious thought to reintroducing these taxes to save future generations, especially the poor from this demon of inequality.

(Author: Dr. S S Sangwan is Former Professor SBI Chair Chandigarh)

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