Is Modi’s ‘shin­ing’ In­dia lit­tle more than a mi­rage?

▶ A new re­port re­veals in­equal­ity is even worse than in the days of the Bri­tish Raj

The National - News - - OPINION -

Asked last year to com­ment on the state of In­dia’s in­equal­ity, the cel­e­brated French econ­o­mist Thomas Piketty replied: “We don’t re­ally know”. But now we do. Ac­cord­ing to a pa­per pub­lished last week by Mr Piketty and his col­league Lu­cas Chan­cel, in­come in­equal­ity in In­dia is at its most ex­treme since 1922, when In­dia was a Bri­tish colony. The lib­er­al­i­sa­tion of In­dia’s econ­omy, which be­gan in the 1980s and in­ten­si­fied in the 1990s, lifted mil­lions of peo­ple out of ex­treme poverty. In­dia is now home to one of the largest mid­dle classes. But the chief ben­e­fi­cia­ries of the state’s grad­ual self-evac­u­a­tion from the “com­mand­ing heights” of the econ­omy have been the top one per cent of In­di­ans, who to­day ap­pro­pri­ate a larger share of the coun­try’s in­come than at any point in the last cen­tury.

Un­der the Bri­tish Raj, the re­port says, the “top one per cent of earn­ers cap­tured less than 21 per cent of to­tal in­come”. This fig­ure, hav­ing dropped to six per cent in the early 1980s, now stands at 22 per cent. Ad­vo­cates of eco­nomic growth have long ar­gued that the pur­suit of equal­ity ham­pers the fight against poverty. Pros­per­ity, they said, would even­tu­ally per­co­late to the bot­tom rungs of so­ci­ety. This clearly hasn’t hap­pened. In fact, ac­cord­ing to Messrs Piketty and Chan­cel, the In­dian mid­dle class was bet­ter off be­tween 1951 and 1980 – the high noon of so­cial­ism. This pe­riod, much de­cried now, is when In­dia built its industrial ca­pac­ity and laid down safety nets for the poor­est.

The bet­ter fu­ture promised by cham­pi­ons of eco­nomic re­forms may yet come about, but what of the mil­lions of In­di­ans who have ad­versely been af­fected by this tran­si­tion? In­dian prime min­is­ter Naren­dra Modi promised to reach out to them. Yet his pol­icy of “de­mon­eti­sa­tion”, which banned 86 per cent of all cur­rency in cir­cu­la­tion, only com­pounded the mis­ery of In­dia’s poor­est. The rich are get­ting richer, the mid­dle class is get­ting poorer, and there is no up­ward mo­bil­ity for the poor. If Mr Modi doesn’t ur­gently ad­dress this problem, “shin­ing In­dia” will come to be seen as a cruel hoax.

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