Inequality in World

♤ According to Oxfam’s report-

o In 2018, world’s 26 people owned the same wealth as the poorest 50% i.e. 3.8 billion

people.

o In the 10 years since the financial crisis, the number of billionaires has nearly doubled.

o Between 2017 and 2018 a new billionaire was created every two days.

o The world’s richest man, Jeff Bezos, the owner of Amazon, saw his fortune increase to

$112bn. Just 1% of his fortune is equivalent to the whole health budget for Ethiopia, a country of 105 million people.

♤ The World Inequality Report 2018 showed that between 1980 and 2016 the poorest 50% of humanity only captured 12 cents in every dollar of global income growth. By contrast, the top 1% captured 27 cents of every dollar.

Thus the inequality is on an increasing trend in the world as well as in India.

2.5. Causes of Inequality

Some economists suggest following reasons for the widening inequality in India-

A. Inequitable and Uneven Distribution of Economic Growth

♤ India's economy continues to grow with its GDP rising faster than most nations but people living at the bottom 10% are characterized by low wages; long working hours; lack of basic services such as first aid, drinking water and sanitation.

♤ Phenomenon of billionaire boom is a symptom of failing economic system where those who are working hard, growing food for the country, building infrastructure, working in factories are struggling to fund their child’s education, buy medicines for family members and manage two meals a day.

B. Oxfam report 2019 puts the blame for increasing inequality on biased economic framework towards rich, where

♤ Top rates of tax on the wealthiest people and corporations are lower than they have been for decades.

♤ Unprecedented levels of tax avoidance and evasion ensure that the super-rich pay even less.

C. Urban- Rural Inequality

♤ India’s badly shaped agricultural and rural safety nets. Per capita food production is going down. Rural infrastructure such as power, road transport facilities are in a poor state.

♤ Rural job scheme and public distribution system performing far below their potential. This has added to the suffering of rural India while market forces are acting in favour of urban India, which is why it is progressing at a faster rate."

2.6. Inequality, Poverty and Economic Growth

Economic growth and inequality play a major role in generating changes in poverty. High and sustained growth is essential for poverty reduction if the distribution of income remains more or less constant. Likewise, greater inequality tends to increase relative poverty. For these reasons, rise in growth has not led to commensurate reduction in poverty in countries where income inequality has been rising.