Income Inequality in India

Income inequality is an issue that is found all over the world, in some places more than in others. In India, the top one percent of earners has been seeing exponential growth since the 1990’s, so much so that they currently hold 73% of the entire country’s wealth. India is a country where it’s easy to see inequality- because of the caste system it’s literally in her historical and cultural roots. However, the fact that these numbers that say 1% of earners hold 73% of the wealth is shocking. This is partially because people tend to compare themselves to their past ELEPHANT and their future goals; or if they’re comparing themselves to others, to those who have similar levels of income.

We don’t usually think about the mega-rich because for most people, we will never work with them (although we’re very likely to work for them), we will never speak with them, and we will never be them. This distancing creates what is called the empathy gulf, a separation of rich and poor because of giant social differences. This often leads to complacency for the very poor- an expectation that nothing will ever change and they have been dealt their lasting sad lot in life. The rich often become detached from the struggles of people living in poverty, partially because they never need to see or interact with these people, and partially because of negative framing. Negative framing can go both ways: it’s the words that we use to describe a certain group of people which end up warping our perception of them. Poverty is often associated with dirtiness, laziness, and lack of intelligence, while being wealthy is typically associated with dedication, high intelligence, and cleanliness. Neither of these stereotypes captures the reality of life on either side of the spectrum, and that can be very dangerous.

When India had a socialist government in the 1960s and ’70s the bottom half of India’s earners saw a faster economic growth than what has been happening since then.  By the 1990s, however, this growth had nearly slowed to a stop and the top 10% of earners saw huge growth while the bottom 90% nearly stayed stagnant. In 2005, the bottom 50% and the top 10% had the same amount of income, but since then the top 10% have been gaining more while the bottom 50% have become worse off.

Now, you might be wondering how these numbers make sense since at the beginning of this post I told you that the top 1% own 73% of the wealth. In the 1990s, the top 0.1% alone grew more than the entire bottom half of the country. Not only that, but we need to remember to make a distinction between wealth and income. Most of the wealthiest people are not CEOs. In fact, it’s incredibly difficult to become break into the top 1% with just a regular job. The majority of these people are making their money off of investments and assets, which coincidentally, are taxed differently than regular income. While an annual income above 10 lakhs is taxed at a rate of 30%, according to BusinessToday assets are only taxed if they have a net worth of greater than 30 lakhs, and even then they are only taxed at one percent! Even with this ridiculously small gap, it’s up to every citizen to be honest and file their taxes correctly. If nobody evaded their taxes – neither the super-rich nor the everyday worker – India would have enough money to give every village a good health clinic, a school, and electricity for every household.

So where does HEEALS fit into this? We work to provide capacity-building workshops for the impoverished, and while there is lots of work to be done today, we aim to see a day where the need is not as great. Maybe there would be less of a need for workshops about things as basic as hand-washing if there was a more equal distribution of resources. If families could afford to keep their kids in schools and live in clean neighbourhoods, there would be a smaller need for the work HEEALS is doing. As it stands now, we are doing our work and raising awareness about the reasons this work is necessary. Income inequality, wealth inequality, and tax evasion are all contributing factors to the terrible state that impoverished communities find themselves in. As anyone can see and can tell you, the government is not doing its job in taking care of its people. Perhaps this is because of the empathy gulf. Perhaps it’s because they don’t have the resources. Perhaps it’s because people are self-absorbed or greedy. Perhaps it’s a mix of many factors, but as individuals we need to do what we can to make a difference. Those of us who are better off in society need to work hard to avoid the pitfalls that allow us to begin to look down upon and care less about people who are not as well off.

So, let’s review. Income inequality is pervasive, wealth inequality is even more so. This hurts poorer people because even though the majority of them are just as capable as the super-rich, if they were given the same resources, upbringing, and inheritance they are perceived as lazier and less intelligent. It also makes wealthier people more and more disconnected from the rest of the population, and the government should be doing more to fight this problem. Individuals also should be doing more to fight this problem in the way that they treat their employees and by avoiding tax fraud for the sake of personal benefit over societal good.

How can you make a difference in such a big issue? Firstly, avoid doing the negative actions discussed in the previous paragraph. If you’re an employee, even if that means you hire a maid, make sure you’re paying your employees a living wage, not just a minimum wage. Finally, be sure to write to your political representatives and encourage them to make good decisions on behalf of your city, province, and country. If you hear of a large company that is not paying their employees properly you can try to start a boycott of the store and if you have any type of influence over companies, use it for good rather than harm. Don’t invest in companies who are participating in immoral practices concerning their taxes or who they employ. Think before you do, and act out of love for others rather than for your wallet.

-Rachel 

Wash & Intern Coordinator 

Sources:

Clear Tax. Retrieved from: https://cleartax.in/s/income-tax

Ghosh, J. (2016, 03, 9). Tax dodging is a crime against developing countries. OxfamIndia. Retrieved from https://www.oxfamindia.org/blog/1515/tax-dodging-crime-against-developing-countries

Hasking, D., Ghose, T. (2013, 12). Taxing your riches. Business Today. Retrieved from https://www.businesstoday.in/moneytoday/expert-view/tapati-ghose-on-wealth-tax-investment-are-you-eligible/story/200940.html

Hassan, R. (2017, 12, 23). India’s rising inequality is taking the shine off its growth story even in the world’s eyes. Scroll.in. Retrieved from https://scroll.in/article/862368/indias-rising-inequality-is-taking-the-shine-off-its-growth-story-even-in-the-worlds-eyes

Shapiro, I. (2002). Why the poor don’t soak the rich. Daedalus, 131(1), pp. 118-128

Staff, Business Today. (2018, 01, 23). Income inequality gets worse; India’s top 1% bag 73% of the country’s wealth, says Oxfam. Business Today. Retrieved from https://www.businesstoday.in/current/economy-politics/oxfam-india-wealth-report-income-inequality-richests-poor/story/268541.html

Staff, The Wire (2017,12,14). Income Inequality Highest in India Since 1980s, Finds New Report. The Wire. Retrieved from https://thewire.in/economy/income-inequality-highest-india-since-1980s-finds-new-report

World Inequality Database. Retrieved from https://wid.world/country/india/