India needs a new social contract
The pandemic has dramatically laid bare the catastrophic public costs of inequality. Thousands of lives could have been saved if much greater investment had been made in the provision of public health services. The explosion of mass hunger and unemployment and the dislocation of millions of working poor could have been avoided if labor protection, social security and wage levels for workers had been guaranteed.
“Inequality Kills” is the apt title of a devastating report by Oxfam India released at the World Economic Forum in Davos. For India’s super-rich, the pandemic has become a time to skyrocket their wealth. The worst year of the pandemic for India was 2021. In that year, the net wealth of a single Indian billionaire, Gautam Adani, increased eightfold, from $8.9 billion in 2020 to 50 $.5 billion in 2021. Mukesh Ambani’s net worth doubled to $85.5 billion in 2021, taking him from India’s richest man to Asia. In fact, Ambani added Rs 90 crore to his wealth every hour as early as March 2020, the start of the pandemic. In 2021, the number of dollar billionaires in India has increased by 39%. India is now home to the largest number of dollar billionaires, after the United States and China, with more billionaires than France, Sweden and Switzerland combined. In 2020, 98 families held more wealth than 555 million Indians. India’s richest 10% owned 45% of the country’s wealth. Three-fifths of India’s top 100 added $1 billion or more to their wealth in 2021 compared to the previous year.
During this same period, as many as 84% of Indian households suffered a drop in income, many in deep and persistent poverty. The RBI estimated a GDP contraction of minus 8.7 to 7%. 120 million jobs have been lost, including 92 million in the informal sector. In 2021, the FAO reported that there were 200 million undernourished people in India and India was home to a quarter of all undernourished people in the world. Pew estimated that the number of poor people in India had doubled from 55 million in 2020 to 120 million in 2021. Oxfam reports that daily wage workers exceeded the number of people who committed suicide in 2020, followed by the self-employed and unemployed.
Media assessments fail to adequately acknowledge that much of the grim economic devastation surrounding us in India today – death, unemployment, hunger – is not caused primarily by the Covid-19 virus. They are the consequence of market-oriented public policies that have fostered unequal life chances. This has been further exposed in these times of global calamity.
Imagine a very different India. Imagine, for example, a country that guaranteed free and quality health care for every citizen, a guarantee of food for all, the rights of workers to social security and payment of wages for all during the confinements, as well as decent housing and drinking water. The deaths and unemployment that engulfed so many Indians could have been avoided. If millions of workers had more money in their hands, the biggest economic contraction since independence could have been avoided. If decent social housing and a supply of clean water had been guaranteed by governments for all residents, it would have enabled the millions of people forced to live in overcrowded shacks to protect themselves by keeping their distance in well-ventilated buildings and in washing their hands regularly. Generation Y could then argue: all this is inaccessible; what good is it then to paint scenarios of utopias?
But just as today’s humanitarian crisis could have been avoided, the alternative is entirely feasible if the people and government commit to the goals of the Constitution. India devotes only 3.54% of its budgetary resources to health care, much less, as Oxfam notes, than other middle-income countries such as Brazil (9.51), South Africa ( 8.25) and China (5.35). Income inequality further reduces life chances in India for those disadvantaged by caste, gender and religious identities. A Dalit woman, for example, has a life expectancy 15 years less than that of an upper-caste woman. Faced with a failing and starving public health system, even the poor have to rely on private health providers, and 60% of health expenditure in India is borne by patients, among the highest in the world, and a major cause of poverty. In the pandemic, the exclusions have been even more dramatic. Oxfam found middle-class families were spending Rs 4 lakh a day in private hospitals during the second wave – what a casual worker earns in 1,000 days.
The starting point for our vision of a new India is for the state to take responsibility for providing quality health care, education, food, pension, clean water and housing, free or affordable way for all citizens. Economist Prabhat Patnaik, in his contribution to India’s exclusion report published by the Center for Equity Studies, says that to fund all of this would require a public will to expand taxation of the super-rich. To fund all of this, he calculates, all it takes is two taxes levied only on the richest 1% of the population – a 2% wealth tax and a 33% inheritance tax. Our government is doing the opposite; it abolished the wealth tax in 2015 and reduced already low levels of corporation tax. The result is regressive taxation that burdens the poor and extremely low public spending.
Those who care about a kinder world should not miss this moment when the pandemic has revealed to us the horror of our moral collapse; economic and social arrangements that privilege some lives, but treat others as consumables. The struggle of our time must be for a new social contract based on solidarity and inclusion.
This column first appeared in the print edition of January 29, 2022 under the title “The Inequality Epidemic”. The author is Richard von Weizsacker Fellow and President of the Center for Equity Studies