What 2020 did to India’s inequality
Until now, the burden of this once-in-a-century crisis has been borne unequally, and mostly by the poor.
(Photo: Reuters)Premium
Rahul Lahoti,
Amit Basole
The bottom 10% of Indians lost a fourth of their income last year. Can the Budget put a lid on widening inequality?
In the shadow of an upcoming Union Budget, these facts acquire more resonance. The govt should consider a covid cess on the rich in order to partly fund direct support to the poor.
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BENGALURU :
Even before covid-19, India was already a highly unequal country. As per the World Inequality Database, the share of the top 10% in India’s national income was about 56%, much higher than comparable countries like Indonesia (41%), Vietnam (42%), and even China (41%). India’s pandemic-induced economic hit is expected to be much worse than any of these comparable Asian nations.
Total number of employed has been sliding between October and December as per CMIE data
Mahesh Vyas of CMIE believes Covid 19 vaccines could prove to be the game changer for jobs
News on the economic front has mostly been positive since September last year. Parameters like GST collections, corporate results, electricity consumption, etc have been showing a sharp recovery since April and May 2020 when the full-blown impact of the lockdown was being felt. Employment though, has followed a different trajectory as per data put out by the Centre for Monitoring Indian Economy.
CMIE puts out weekly job data and it s CEO and Managing Director Mahesh Vyas tells ET Now that while there has been a tremendous recovery since April 2020 when employment dropped to 280 million from an average of 405 million a year ago, that recovery has been sliding gradually since September.
January 18, 2021
“The pandemic has reinforced some of the most latent inequalities in India, both socially and economically,” says Jayati Ghosh, professor of economics at the University of Massachusetts Amherst. And to map this inequality, she says, one need only look at who has gained.
In 2020, the cumulative wealth of 828 Indians on the Hurun India Rich List stood at $821 billion (Rs60.15 lakh crore), up by $140 billion from a year ago. A large part of this increase was thanks to one man and one company Mukesh Ambani’s Reliance Industries (RIL).
Ambani’s RIL raised $26.4 billion in deals with Facebook, Google, and several other investors, during the peak of the pandemic-related lockdowns. These deals happened in a climate of economic turbulence in India, which reported a 23.9% degrowth in the quarter ending June 2020, the first GDP decline in four decades.
UPDATED: January 17, 2021 17:29 IST
In the hot seat: Finance Minister Nirmala Sitharaman at
a press conference in November 2020 (Photo: Getty Images)
When Finance Minister Nirmala Sitharaman presents Budget 2021 on February 1, the circumstances that she will do so in will be, without doubt, exceptional. The Covid-19 lockdown last year was an economic earthquake of sorts, comparable to the global financial crisis sparked off by the collapse of Lehman Brothers in September 2008. D.K. Joshi, chief economist at Crisil, says, No other budget compares as closely to the upcoming one as the one that followed the Lehman Brothers crisis. Thanks to the fiscal stimuli rolled out in 2008-09, India emerged rather unscathed from that crisis, though the splurge seeded other problems, including a spate of corporate bankruptcies and mounting bad loans in the following years.