Addressing income inequality is a serious global challenge. It is a complex and multifaceted endeavour which demands examining, trying and implementing several different strategies to find a suitable way to foster a more equitable society. Here are some key areas to act on.
First, progressive taxation. Progressive tax policies are required to redistribute wealth from the affluent to the marginalised. It is not about stealing from the rich to pay the poor. It is about using tax money to improve health, education, skill development, the environment, and facilitate job creation.
Second, education and skill development. Access to quality education, skill development and lifelong learning is critical to enhance employability and increase earning.
Third, fair labour laws. Enforcing labour rights, minimum wages, safety, security, eliminating child labour, protection against exploitation, and collective bargaining are essential to ensure that all workers benefit from economic growth.
Fourth, investment in infrastructure. This will reduce regional disparities, assure inclusion and sustainability. It is critical to invest in infrastructure that is related to the environment, water, sanitation, forests, energy, climate change, housing, and transportation.
Fifth, the contribution of the super rich. Bill Gates and Warren Buffet began a global campaign called the ‘Giving Pledge’ for the super rich to donate more than half their wealth in order to benefit the public.
As of 2023, more than 235 super rich people in 28 countries have committed $600 billion for public good. In many advanced countries there is a special inheritance tax (Japan 55%, South Korea 50%, France 45%, and the United States 40%) before transferring wealth to the next generation. However, it applies only to the super rich and large asset transfers. This tax has been proposed by several people in the past in India. The World Inequality Lab says that in India, the share of the top 1% in the national income is among the highest in the world, and that India is today more unequal as a society than it was under British rule. Is this acceptable?
About inclusion and equity
This is not a debate about increasing or introducing new tax for the middle class, the rich or the super rich. It is about locating the resources needed to lift millions more out of poverty and joblessness, and to do this in ways that encourage value addition through production and efficiency, quality and consumption as well as inclusion, sustainability, dignity and justice. The need is for analysis and debate, not for inventing falsehoods to cause a scare. India has already lifted millions out of poverty. However, what it has done is simply not enough. More needs to be done with brave and bold initiatives that copycat solutions will not achieve. The new economics is all about moving from “economies of scope and scale” to “economy of purpose”. And the purpose is inclusion, equity and sustainability to lift millions out of poverty. Discussions on fiscal and other measures should be understood within this context.
What are the strategies that India can pursue that can create resilience in these uncertain times? There is no silver bullet, and none is suggested. The need is for reflection and a policy framework that can ensure growth with justice and hope, by looking at and debating every possible option available through learning from global experience and drawing on India’s creative and innovative abilities.
Some continue to see globalisation and market liberalisation as silver bullets rather than as strategies which demand capacities for vigilance and constant mid-course correction. Past turmoil in global markets, the COVID-19 pandemic, and the wars in Europe and West Asia remind us that globalisation extracts its own price.
To me, the Gandhian model of development with a focus on decentralisation, local needs, local talent, local resources, local production and “small is beautiful” makes huge sense in a hyper-connected world in order to ensure local employment and prosperity in India. Investment in small and medium-sized enterprises and local innovations is equally critical to network to scale for global markets. Unfortunately, banks prefer large loans to big companies as opposed to small loans to SMEs. This must change with digital technology for financial services. India has 800 districts with unique climate, natural resources, capabilities and talent to build 800 production centres for a variety of goods and services. It also means 800 digital platforms to network to build supply chain, logistics, markets and distribution centres.
Where the future lies
Future jobs even in the AI-dominated world will come from food, education, health services, tourism and manufacturing. In fact, young Indian talent is the workforce for the world. This issue is thus about assessing progress in terms of human and technology development and a new economic model based on decentralisation and digital platforms to network needs and change consumption patterns and behaviours. The future definitely lies in a new tech economic model to deliver on inclusion, basic human needs, decentralisation, conservation and non-violence. The future also lies in a change in lifestyle that values happiness from “sharing and caring” as opposed to a “vulgarity of conspicuous consumption”.
Sam Pitroda is a telecom technocrat with 60 years of experience, an inventor, policy maker and global thinker
