Inequalities

 Inequalities are growing in India – this has been

corroborated by scholars and government bodies
alike. The impact of inequality is especially stark at the
margins of the Indian society, with some communities
such as the Scheduled Tribes (STs) suffering from
physical remoteness and systematic exclusion from
the means to achieve vertical mobility. Furthermore,
the concentration of wealth continues to be around
primordial characteristics such as caste. On one
hand, inherited wealth and caste privilege continue
to shape power and influence and on the other hand,
we see the persistence of marginalization among
historically disadvantaged who are trapped in intergenerational
poverty.
Wealth Inequality
Oxfam India’s 2023 India Supplement reveals some stark
findings proving that the gap between the rich and the
poor is indeed widening. Following the pandemic in 2019,
the bottom 50 per cent of the population have continued
to see their wealth chipped away. By 2020, their income
share was estimated to have fallen to only 13 per cent of
the national income and have less than 3 per cent of the
total wealth. Its impact has been exceptionally poor diets,
increase in debt and deaths. This is in stark contrast
to the top 30 per cent who own more than 90 per cent
of the total wealth. Among them, the top 10 per cent own
more than 80 per cent of the concentrated wealth. The
wealthiest 10 per cent own more than 72 per cent of the
total wealth, the top 5 per cent own nearly 62 per cent
of the total wealth, and the top 1 per cent own nearly
40.6 per cent of the total wealth in India.
The country still has the world’s highest number of
poor at 228.9 million. On the other hand, the total
number of billionaires in India increased from 102 in
2020 to 166 billionaires in 2022. The combined wealth
of India’s 100 richest has touched INR 54.12 lakh crore.
The wealth of the top 10 richest stands at INR 27.52
lakh crore – a 32.8 per cent rise from 2021.
Increase in revenue during hard
times and inflation
Before the pandemic, in 2019, the Central Government
reduced the corporate tax slabs from 30 per cent to
22 per cent, with newly incorporated companies paying
a lower percentage (15 per cent). This new taxation
policy resulted in a total loss of INR 1.84 lakh crore
and had a significant role in the 10 per cent downward
revision of tax revenue estimates in 2019-20. To
increase revenue, the Union Government adopted a
policy of hiking the Goods and Services Tax (GST) and
excise duties on diesel and petrol while simultaneously
cutting down on exemptions. The indirect nature of
both the GST and fuel taxes make them regressive,
which invariably burdens the most marginalized.
The Ministry of Statistics and Programme Implementation
reported that the all-India inflation rates based on both
CPI (Consumer Price Index) (General) and CFPI (Consumer
Food Price Index) were consistently higher in rural
India (7.56 per cent) than urban India (7.27 per cent) in
September 2022. Though overall inflation declined in
October, the gap between rural and urban inflation only
widened, reaching nearly 2.5 times the gap in September
2022. Moreover, the weightage for “food products” in
the inflation calculation is nearly double in rural India
compared to urban India reflecting how food inflation in
rural India has primarily driven the average increase in
prices of commodities.
In order to reduce inflation, the Reserve Bank increases
the repo rate, which is understood as the rate at which
the Reserve Bank lends money to commercial banks.
An increase in the repo rate would ideally reflect rising
consumer lending rates and thereby suppress demand.
However, the Reserve Bank’s hawkish monetary policy
of hiking the repo rate has little consequence in
ensuring an increase in supply. Consequently, despite
increasing the repo rate five times by a total of 225
basis points from 4 per cent to 6.25 per cent (between
May and December 2022), inflation has consistently
breached the 6 per cent statutory limit set out in the
amended Reserve Bank of India Act, 1934.