If Modi Is Against Dynasties, Why Does He Serve Corporate Dynasties?

Why No Wealth Tax On India's Corporate Dynasties?

The AIPF People’s Charter for 2019 Elections notes that inequality spawned by three decades of neo-liberal policies has reached its zenith over the last 5 years: the latest Oxfam inequality report shows that in India the wealth of 9 billionaires is equal to the wealth of the bottom 50% of our population.

The Modi Government has brought ‘acche din’ for India’s super-rich alone, at the cost of its ordinary people. The Oxfam survey showed that the fortunes of Indian billionaires swelled by ₹2,200 crores a day in 2018 (contrast this with the mere Rs 3.30 a day that the Modi Government’s latest budget has offered every member of peasant families.) In 2018, in the wake of the demonetisation disaster where Modi promised to destroy black money hoarded by the super-rich, the top 1% of the country’s richest got richer by 39% as against 3% increase in wealth for the bottom half of the population.

Modi makes speeches against political dynasties - yet the BJP not only promotes political dynasts and helps sons of Modi’s best friends amass riches: it also allows corporate dynasts to control and plunder India’s resources and wealth. In 2018, the combined revenue and capital expenditure of the Central and state governments for medical, public health, sanitation, and water supply is Rs 2,08,166  - less than Mukesh Ambani’s wealth of Rs. 2.8 lakh crore.

When we ask Governments for public health, education, rations, farmers’ welfare, social security, they say ‘We have no money’. The truth is, India’s wealth is cornered by a handful of corporate parivars: the Oxfam report found that if the 1% richest Indians pay just 0.5% extra tax on their wealth, the government can increase spending on health by 50%!

The Modi Raj - which has been nothing but a Corporate Billionaire Raj - must end in May 2019 - and the future Government too must be compelled to end the control of corporate parivars on India’s resources, policies, politics, and Governments. This is why the AIPF Charter demands:

• A wealth tax and inheritance tax on the India’s richest 1%, which can fund budgets for public health and education of India’s ordinary people.  
• An end to loan waivers and tax waivers for India’s super rich 1%.
• Transparency in political and electoral funding so that corporations can no longer buy up political parties, and Conflict of

Interest laws be enacted to safeguard public policy-making from corporate interests and lobbies
In this feature, we share excerpts from various recent reports that outline the state of India’s billionaires in contrast to the state of India’s people.

The combined revenue and capital expenditure of the Centre and all the states for medical, public health, sanitation and water supply is Rs 2,08,166 crore (a little more than Rs 2 lakh crore) -- which is less than the wealth of country's richest man Mukesh Ambani at Rs 2.8 lakh crore.

 

Public Good or Private Wealth? The India Story

(From the Oxfam Inequality Report 2019)

Global Inequality on the Rise

The Davos report 2019 “Public Good or Private Wealth?” shows that our economic system is broken, with hundreds of millions of people living in poverty, while huge rewards go to those at the very top. In the 10 years since the global financial crisis, the number of billionaires has nearly doubled. In the past year, a new billionaire was created every two days and a total of 2208 billionaires worldwide in 2018. The wealth of the world’s 1,900 billionaires increased by US$900 billion (INR 63000 billion) in the last year alone, or US$2.5 billion (INR 175 billion) a day (1 Billion = 100 Crore). Meanwhile the wealth of the poorest half of humanity, 3.8 billion people, fell by 11%. Wealth is becoming even more concentrated – in 2018, 26 people now own the same as the 3.8 billion people who make up the poorest half of humanity, down from 44 people last year. The world’s richest man, Jeff Bezos, owner of Amazon, saw his fortune increase to US$112 billion (INR 7840 billion). Just 1% of his fortune is the equivalent to the whole health budget for Ethiopia, a country of 115 million people.

Inequality Affects India Too: Boom Time for Indian Billionaires

Similarly, in India, wealth inequality is on the rise. The Gini wealth coefficient in India has gone up from 81.2% in 2008 to 85.4% in 2018, which shows inequality has risen. Rising inequality threatens the social fabric of the nation. Inequitable growth provides fuel for social unrest and rising crime. In the last 12 months, total wealth of India has increased by US$151 billion (INR 10591 billion). Wealth of top 1% increased by 39% whereas wealth of bottom 50% increased a dismal 3%. (Estimated from the data available in the Global Wealth Report 2018, Credit Suisse, available on https://www.credit-suisse.com/corporate/en/articles/news-and-expertise/global-wealth-report-2018-us-and- china-in-the-lead-201810.html)     
In India, billionaire fortune grew by INR 22 billion (US$0.31 billion) a day in 2018 while the poorest decile remains in debt since 2004. India added 18 new billionaires in the last year raising the total number of billionaires to 119. Their wealth crossed the US$400 billion (INR 28000 billion) mark for the first time. It rose from US$325.5 billion (INR 22725 billion) in 2017 to US$440.1 billion (INR 30807 billion) in 2018. This is the single largest annual increase since the 2008 Global Financial Crisis.

The total wealth of Indian billionaires is higher than the total Union Budget of India for the fiscal year 2018-19 which was at INR 24422 billion. In the last 12 months, the total wealth of 119 Indian billionaires increased by INR 80.2 billion (US$114.6 billion). In the last 12 months, the total wealth of 119 Indian billionaires increased by INR 8022 billion (US$114.6 billion). This amount is equivalent to the combined (Centre and States) direct tax revenue (INR 8621 billion in 2016-17) of the country.

Between 2018 and 2022, India is estimated to produce 70 new dollar millionaires every day. (https://www.thehindubusinessline.com/economy/number-of- billionaires-to-soar-by-over-50-by-2022-report/article9968726.ece)

India’s top 10% of the population holds 77.4% of the total national wealth. The contrast is even sharper for the top 1% that holds 51.53% of the national wealth. The bottom 60%, the majority of the population, own merely 4.8% of the national wealth. Wealth of top 9 billionaires is equivalent to the wealth of the bottom 50% of the population. High levels of wealth disparity subverts democracy.

Inequality in India has a female face

Inequality and its impact are experienced by women and men differently. Research has shown that women are less likely to have paid work when compared to men; the paid work that they do bring them less earnings as compared to men due to the existing wage gap and therefore households that rely primarily on female earners tend to be poorer. As per the latest available data (for the year 2011-12), the Gender Pay Gap was 34%, that is women are still receiving 34% less wages than their male counterparts for carrying out the same work. Moreover, women are not a homogenous group and the various intersections of caste, class, religion, age and sexual orientation have further implications on women’s inequality as a process.

India continues to perform poorly in terms of gender, as is evident in its poor performance on the Global Gender Gap Index. In 2018, it was 108th on the World Economic Forum’s Global Gender Gap Index, 10 notches less than in 2006. Indeed, it scored third lowest on health. Its overall performance is far below the global average and behind its neighbours - China and Bangladesh.

It robs India of its human potential

The roots of this marginalization lie deep. While a fair society should offer equal opportunities to all its children, it is often economic status or social identity that dictates its destiny. Forty-two percent of India’s tribal children are underweight, 1.5 times higher than non-tribal children.5 Children from poor families in India are three times more likely to die before their first birthday than children from rich families. A Dalit woman can expect to live almost 14.6 years less than one from a high-caste. While the literacy rate in Kerala, Mizoram and the UT of Lakshadweep is over 90%, it is just little above 60% in Bihar. The percentage of children and young people who were never enrolled in school (age group 5-29) in rural areas is double than that of urban areas (NSSO). In India, girls belonging to rich families (top 20%) get on an average nine years of education, while girls from poor families (bottom 20%) get none at all. (Source: Latest NFHS data)

Poor Public Services for the Poor

Addressing these inequalities in achieving human potential requires a robust system of public provisioning of essential services. Yet, there are major gaps in public services in India. A large part of India has accepted the inevitability that public services, especially those targeted at the poor, are of poor quality. The reasons are manifold.

There is an acute shortage of health specialists in rural areas. In 2012, according to the World Bank, India had 0.7 doctors per thousand people. In contrast, the United Kingdom had 2.8 doctors per 1000 persons and China had 1.8 doctors per 1000 persons.

Barely 12.7% of India’s schools comply with the minimum norms laid down under the Right of Children to Free and Compulsory Education Act (RTE). There are huge differences between states; it ranges from 39% in Gujarat to less than 1% in Nagaland, Sikkim, Meghalaya, Tripura, and Lakshadweep. While almost all teachers in schools in Delhi, Gujarat, and Puducherry have the requisite academic qualifications, 70% of teachers in Meghalaya continue to lack the necessary qualifications. Where a child is born continues to determine a child’s destiny.

Under-funding of Public Services

At the heart of this continued poor quality of provision is chronic under investment in public services. Despite India graduating to a lower-middle-income country and accounting for 1/5th of the global burden of disease burden, its public spending on health continues to hover around 1.3% of its GDP compared to the commitment made under the National Health Policy, 2017 to increase this to 2.5% of GDP by 2025. Similarly, India’s spending on education has hovered at under 4%, despite successive governments’ electoral commitment to spending 6% of its GDP on education.

This is not just a function of meeting an arbitrary figure. India continues to fail to spend what is necessary to realise the minimal norms laid down under the RTE Act. Thus, Bihar spends only 30% of what is required to implement the Act in totality i.e. getting all children into school, hiring the minimum numbers of teachers required, putting infrastructure in place, and placing a textbook in the hands of each learner. (https://nipfp.org.in/media/medialibrary/2017/12/WP_2017_201.pdf) Research points to a clear correlation between actual per pupil expenditure and learning outcomes. (https://www.ideasforindia.in/topics/human-development/india-s-education-quandary-learning-from- learning-outcomes.html) A functional school is an essential, if not adequate, condition for any sustainable improvement in India’s education system.

While spending on education has to be equitable, the government itself often discriminates financially. For example, the per child unit cost in government-run Kendriya Vidyalaya schools for central government employees in transferable jobs is INR 27,000 per child compared to INR 3,000 per student in other Government schools across India. (https://timesofindia.indiatimes.com/home/education/Government-spends-Rs-85000-on-each-Navodaya-student- annually/articleshow/47754083.cms)  

The government needs to practice more equitable distribution and investment in children in the country and raise the per child expenditure in non-Kendriya Vidyalaya schools.

In tangible terms it means that India spends INR 1,112 per person on public health per capita every year. This is less than the cost of a single consultation at the country’s top private hospitals or roughly the cost of a pizza at many hotels. That comes to INR 93 per month or INR 3 per day. Indians, therefore, have no other choice but to spend out of pocket on health. As a result, 63 million people are pushed into poverty every year.

A fifth of the ill in both rural and urban areas deny themselves treatment; 68% of patients in urban India and 57% in rural areas attributed “financial constraints” as the main reason to take treatment without any medical advice. Insurance does not offer an alternative, not least given that most insurance schemes (including the new Ayushman Bharat) fail to cover outpatient costs that account for 68% of expenses.

Ironically while India attracts a large number of foreign patients for medical tourism on the plank of ‘world class services at low cost’, only 11% of its Sub Health Centres (SHC) and 16% of Primary Health Centres (PHC) meet the Indian Public Health Standards (IPHS). India manages to simultaneously rank 5th on the Medical Tourism Index and 145th among 195 countries in terms of quality and accessibility of healthcare.

The Growth of Private Provision

The gap in provision is sought to be filled by a growing private sector. Growth of private provisioning contributes to social segregation with children of the rich and poor in India growing up in parallel universes. Children from financially better off families attend private schools with better facilities and smaller class sizes which extend economic and social advantages of the already more privileged children. (https://www.campaignforeducation.org/wp/wp-content/uploads/2018/04/PPPL_FINAL-EDITION_15-SEPT- 2016_A4_WEB.pdf)

Between 2010-11 and 2015-16 student enrolment in government schools across 20 states fell by 13 million, while private schools acquired 17.5 million new students. (http://archive.indiaspend.com/cover-story/in-5-years-private-schools-gain-17-mn-students-govt-schools- lose-13-mn-26146)

Many private schools are unregulated with lack of basic standards of education, safety, and infrastructure. However, the government’s neglect of public schools is leading many parents, including those from poor families, to move their children from public to private schools. This creates an educational system stratified by social class with education quality determined by how much a family can pay. In contrast, when schools provide spaces for rich and poor students to mix, as has been envisaged under Section 12(1)(c) of the RTE Act, research suggests that this makes rich students more prosocial, generous, and egalitarian, less likely to discriminate against poor students, and more willing to socialise with them.(Rao, G (2018). ‘Familiarity does not breed contempt: Generosity, Discrimination and Diversity in Delhi schools’ bit.ly/2QDKg8n) Unfortunately, private schools frequently fail to sustain inclusive environments in schools, instead creating hurdles to avoid enrolling children with disabilities and from marginalized communities. (https://timesofindia.indiatimes.com/city/delhi/with-just-3-months-left-in-session-doe-yet-to-fill-over-1200-seats-for- children-with-special-needs/articleshow/67222271.cms)

It places girls at particular disadvantage; the gender gap in private school enrolment in India is rising, even as it is closing in government schools.  World Bank’s Living Standards Measurement Study in Uttar Pradesh clearly shows that gender gap in enrolment even in private schools is increasing over the years. The gender gap in enrolment in private schools for the age group 6-19 years was 1 in 1997-98, which increased to 6 in 2007-08 and further rose to 10 in 2010-11. (Sahoo, S. (2015) Intra-household gender disparity in school choice: evidence from private schooling in India. www.isid.ac.in/~soham9r/doc/pvt_paper.pdf)  

Despite declining enrolment in government schools, they remain the mainstay of education provision in India accounting for 73.1% elementary schools and 58.6% enrolment (http://udise.schooleduinfo.in/dashboard/elementary#/). No country has ever universalised education without building a robust and equitable education system; subsidised or free education imparted through public schools is also a great inequality leveller. The government should invest more in public education system to counter the rising inequality in essential public services such as education.

Private providers in health and education are also under-regulated. A recent government report (https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/hospitals-prescribe-drugs- excluded-from-price-control-to-boost-profit-nppa/articleshow/63003894.cms) has detailed the exorbitant profit margins of one of those hospitals by prescribing non-scheduled drugs which are outside the regulator’s purview by as much as 12 times the price of scheduled drugs.

One study in the Indian state of Uttar Pradesh found that even low-cost private schools are unaffordable for the poorest 40% of families, with girls and children from lower castes or religious minorities less likely to attend.1 

  • 1. J. Harma. (2011). Low cost private schooling in India: Is it pro poor and equitable? International Journal of Educational Development 31 page 350–356, http://sites.miis.edu/comparativeeducation/files/2013/01/Low-cost-private-schooling- in-India.pdf