The COVID-19 pandemic pushed more than 4.6 crore Indians into extreme poverty, while adding 40 new billionaires to the country, according to Oxfam's latest report on inequality.
Since the beginning of the pandemic, 84 per cent of Indian households saw a decline in their income, while the wealth of Indian billionaires increased more than double, rising from US$313 billion in 2020, to US$719 billion in 2021.
Ahead of the World Economic Forum's Davos Agenda online summit, Oxfam released a report titled 'Inequality Kills' to highlight a surge in inequalities, as the pandemic ravaged the world. The report's India-focused supplement further confirmed the findings of the World Inequality Report 2022 - that India is now one of the most unequal countries around the world.
The report recommended a progressive taxation regime, along with a wealth tax for the country's wealthiest, to cover schemes of education, healthcare and social security.
In 2021, as India suffered a massive economic downturn due to the pandemic, the number of Indian billionaires rose from 102 in 2020, to 142 in 2021 - marking a 39 per cent increase in the number of billionaires. Simultaneously, India's healthcare system saw a near collapse during the second wave of the pandemic, while unemployment rose to 15 per cent, as per the report.
At the same time, the collective wealth of India's richest 100 reached a record high of US$ 775 billion (₹57.6 lakh crore), with more than 80 per cent of these families seeing an increase in wealth in 2021, as compared to 2020.
The report notes that the wealthiest 10 per cent Indians have amassed 45 per cent of the national wealth during the pandemic, while the bottom 50 per cent only held 6 per cent. The richest 98 Indian billionaires was found to have a wealth of US$657 billion - the same amount held by the poorest 555 million people in India, or the countries poorest 40 per cent.
The report mentioned three strategies that 'worked in tandem to produce unequal economic outcomes' - India's tax regime, decline in social sector spending, and privatisation of public goods.
Good Times For Adanis, Ambanis
While most Indian households saw a decline in their income during the pandemic, one billionaire - Gautam Adani, India's second richest person - saw an eightfold increase in his wealth in just one year, increasing his net worth from US$8.9 billion to US$50.5 billion. By the end of 2021, his net worth further rose to US$82.2 billion.
Oxfam cited the returns from Adani's newly bought Carmichael mines in Australia, along with a newly acquired 74 per cent stake in the Mumbai airport, as a reason for Adani's immense growth.
During the same time, Mukesh Ambani - India's richest person - increased his wealth two-folds, from US$36.8 in 2020, to US$85.5 in 2021.
Tax The Rich
"Unfortunately, not only has the taxation policy of the Indian government been pro-rich, it has also deprived India's States of important fiscal resources—both particularly damaging in the context of the COVID-19 crisis," Oxfam noted.
The report mentioned that the government tax revenue is disproportionately dependent on indirect taxes, like the goods and services tax (GST), which penalises the poor.
It stated that India's tax collection was already faltering prior to the pandemic, mainly due to increased reductions in corporate taxes, which fell from 30 per cent to 20 per cent during 2019-2020.
This, along with the abolition of 'wealth tax' in 2016, and an increase in indirect tax, has removed the rich from being the country's primary source of tax revenue, the report added.
Oxfam recommended progressive taxation, and the introduction of a 'wealth tax', to ensure that funds are redistributed for ensuring the basic needs of the poorest Indians.
"A 4 percent wealth tax on 98 richest families in India can take care of the Ministry of Health and Family Welfare for more than 2 years, the Mid-Day-Meal programme of the country for 17 years OR the Samagra Siksha Abhiyan for 6 years. Similarly, estimates suggest that a 1 percent wealth tax on 98 richest billionaire families can finance the Ayushman Bharat scheme for more than SEVEN years OR the Department of School Education and Literacy of the Government of India for one year."
- Oxfam, "Inequality Kills" - India supplement, 2022
Social Spending
Oxfam states that there is a declining emphasis in India on social spending, and suggests methods to fight inequality by diverting funds from direct tax revenue towards education, healthcare and social security.
India's budgetary allocation of 3.54 per cent of GDP was found to much lower than other middle-income countries like Brazil (9.51 per cent), Russia (5.32 per cent), China (5.35 per cent), and South Africa (8.25 per cent).
This effectively made healthcare inaccessible to most of India's impoverished population, thus making it harder for them to recover from COVID-19. Dwindling healthcare costs, coupled with a degrading public healthcare system, has also pushed most Indians to opt for private sector to obtain healthcare
"The life expectancy of a Dalit woman is approximately 15 years less than that of an upper caste woman. Additionally, research suggests that relative to higher-caste Hindus, Adivasi life expectancy is more than four years lower, Muslim life expectancy is about one year lower, and Dalit life expectancy is more than three years lower; economic status explains less than half of these gaps."
- Oxfam, "Inequality Kills" - India supplement, 2022
Like healthcare, education was also found to be severely underfunded in the country, according to the report. India allocated only 3 per cent of its GDP on education between 2014 and 2019, far lower than its middle-income counterparts like Brazil (6.1 per cent), Russia (4.7 per cent), and South Africa (6.8 per cent).
It further noted, "Amidst the pandemic, when there was need for increased investment to help all students continue their education in the face of mass school closures, India saw a 6 percent cut in allocation to the education sector."
With classes moving online, only 4 per cent of India's rural students from the Scheduled Caste and Scheduled Tribe categories were able to continue attending classes on a regular basis. The report also noted that the pandemic pushed a large section of children from school to child labour, while child marriages reportedly increased by more than 33 per cent.
Oxfam recommended generating revenue to invest thoroughly on education and healthcare, to make them accessible for the poorest households of the country.