Congress President Mallikarjun Kharge with senior party leaders P Chidambaram, Sonia Gandhi and Rahul Gandhi during the release of the party’s manifesto for the Lok Sabha elections. (Express photo by Anil Sharma)
The Congress party’s manifesto has ignited a crucial debate on rising inequality in India. As the BJP levels baseless accusations of wealth redistribution and inheritance tax plans, it inadvertently spotlights the issue of inequality, which economists like Thomas Piketty have called an “epidemic”. The Congress party argues that the roots of inequality extend to fundamental challenges such as unemployment, stagnant wages, weak investment, a hostile environment for small entrepreneurs, and a lopsided tax regime. Our manifesto lays out in clear terms how we plan to deal with this central challenge. The BJP’s plan is confined to distortion and distraction.
India today is more unequal than it was under the British Raj according to Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty and Anmol Somanchi in ‘Income and Wealth Inequality in India, 1922-2023: The rise of the billionaire raj’. The top 1 per cent of India today has a 40 per cent share of the country’s wealth. Twenty-one billionaires have the same wealth as 70 crore Indians, according to Oxfam. Inequality has sharpened between 2014 and 2023 and the BJP’s policies are directly responsible for this pronounced increase. The Congress is determined to undo the worst excesses of the BJP and to promote inclusive growth.
A cornerstone of rampant inequality is the pervasive scarcity of jobs. Unemployment is a big driver of inequality and has worsened under the Narendra Modi government. Economist Santosh Mehrotra projects using the PLFS data that the absolute number of the jobless has risen from 1 crore (2012) to 4 crore (2022). Forty-two per cent of graduates under 25 are unemployed according to the ‘State of Working India Report 2023’. Women’s presence in the labour market is dismally low.
The Congress manifesto has several proposals to drive employment, such as the filling of 30 lakh sanctioned government posts, a Right to Apprenticeship for graduates and diploma holders, a Rs 5,000 crore Yuva Roshni fund to invest in startups in every district of India and an employment-linked incentive scheme to incentivise hiring by companies.
Wage disparities are another driver of inequality. NSSO data show that the wages of salaried workers and labourers grew rapidly between 2004-05 and 2011-12, while they stagnated or even declined between 2011-12 and 2017-18. More recent CMIE data show continued wage stagnation in recent years versus rapid growth under the UPA. Our Rs 1 lakh Mahalakshmi scheme for women in low-income households and the Rs 400 minimum daily wage should go a long way in boosting their purchasing power.
Perhaps one of the most contentious issues is India’s regressive tax system. The BJP’s tenure has seen the share of corporate taxes go down and income taxes, which a large section of the middle class pays, go up. Worse, indirect tax collection, of which GST is a big part, has risen sharply. Sixty-four percent of GST is paid by the bottom half of Indian society, even as GST is now the biggest category of taxes collected in 2022-23 (28 per cent).
The Congress party proposes a progressive tax reform that promises to “maintain stable personal income tax rates” to “ensure that the salaried class is not subjected to rising tax rates and have clarity to plan their finances”. Our proposals will also lessen the burden of tax on MSMEs that currently pay higher direct taxes than large corporations. Most importantly, we will reform GST and cut the disproportionate burden faced by the poor and the middle class.
Around the world, MSMEs create the most jobs. However, the Modi government’s policies have consistently helped its corporate cronies through tax cuts, loan write-offs and favourable contracts and rules while neglecting the informal economy. Demonetisation and the implementation of GST have grievously damaged the MSME sector.
Covid couldn’t have come at a worse time. While large companies received a Rs 1.5 trillion tax bonanza as part of a pre-pandemic stimulus, there was no such bounty for MSMEs. The Congress party will create a supportive tax and regulatory environment, including incentives for our apprenticeship and employment-linked incentive schemes.
Without more investment, job creation will suffer. However, the fact is that the average 28.7 per cent investment rate under the Modi government is far lower than the 33.4 per cent rate under the UPA. The climate of fear under Modi has been a major barrier to investment, with 8,000 dollar millionaires leaving the country every year according to the Henley Global Citizens report. To free our businessmen and women to do their work, Congress has promised to end this intimidation and abuse by investigative agencies. It is truly an achievement for the PM to have favoured his cronies so much that the broader business community feels compelled to flee the country.
Our manifesto has been attacked for envisioning a more just society for poor and middle-class families by those who never have a problem with large handouts to billionaires. The Modi government wrote off over Rs 16 lakh crore of corporate loans. But heaven forbid if the Congress supports sections of society being left behind — farmers, women, workers, the young and the poor.
Soz is national spokesperson, Congress, and Dubey is member, Congress manifesto committee
