Drastic reforms needed to bridge inequality

If it is true that the government has failed on the economic front, especially in the creation of jobs, the incumbent ruling party is in deep trouble. There has been a rise in unemployment and lower participation of the labour force in the past couple of years that point towards low job creation.

Recent surveys by Oxfam, Pew Research and the Association for Democratic Reforms (ADR) have spelt out clearly that the main concern of voters is jobs. Sensing the insecurity of the people, Congress president Rahul Gandhi has promised Rs 6,000 per person per month for the bottom 20 per cent of the population.

The details of the NYAY (Nyuntam Aay Yojana) scheme have not been spelt out. The financing of the scheme is a big problem because it will cost at least 1 per cent of the GDP, as per the Congress manifesto. It is doable only if taxes are raised for the rich and the corporates and government waste and expenditure are scaled down considerably.

The NYAY scheme will give minimum support to the poorest of the poor so they can sustain themselves during periods of unemployment. It will prevent their standard of living from being pushed down further. If they have cash in hand, the minimum requirements of health and nutrition can be protected.

That the problems India is facing are hard to solve in the short term and only incremental changes can be undertaken in the five-year term of any government at the Centre has been pointed out by the latest Oxfam survey, ‘Mind the Gap: The State of Employment in India’. It gives a clear view of the perennial problems that India is facing and how women are being left out of the growth process. According to it, India is a highly unequal country on all counts. There are inequalities in wealth, income, and consumption as well as structural inequalities of opportunity, region and social groups.

Job creation and employment are the key issues in fighting inequality. Three out of four women don’t work and most are paid 34 per cent less than men performing the same job with the same qualifications. Women are unable to work mainly because they carry a high burden of unpaid care work in the household.

There is a need to raise the minimum wage, otherwise the share of wages will remain low in the national income. According to Oxfam, the nature of production in the organised manufacturing sector has changed as it has an increasing share of profits and declining share of workers’ wages in the net value added. Increasing real wages can lead to moderating wage inequality, ultimately leading to reducing inequality.

The structural problems in society remain unaddressed and inadequate attention is being paid to the socially marginalised and disadvantaged groups. They remain at the bottom of the pile and are forced into stigmatised jobs that ruin their chances of social and economic transformation.

Corruption is endemic. According to the Washington-based Pew Research’s survey of 2,521 respondents, 64 per cent think that most politicians are corrupt. Around 69 per cent of both BJP and Congress supporters share the view that elected leaders are corrupt. Corrupt officials are a big problem, according to 65 per cent, and 64 per cent felt crime is a very big problem in India.

According to another recent report, ‘All India Survey on Governance Issues and Voting Behaviour 2018’ by the ADR, the important questions facing rural and urban India are also mainly economic. The respondents have rated the government’s performance in various key issues relating to the economy.

Better employment opportunities, better healthcare and education, and the availability of safe drinking water are the top three voters’ priorities, followed by the need for better roads and public transport. People want reduced air pollution and safety for their families through better policing and maintenance of law and order.

There are important agriculture-related governance issues due to the dependence on it by half of the population despite falling wages. Availability of water for irrigation is a major concern. Half of India’s agriculture depends on the monsoon for irrigation. The farmers continue to be in deep debt and hence ease of access to loans is a major concern. They are also concerned about getting higher, more remunerative prices for their produce and are worried about the quantum of agricultural subsidy for seeds and fertilisers. In none of the voters' priorities the performance of the NDA government was rated as average or above average.

 If the election issues had remained mainly economic, the outcome of the elections would have been quite unpredictable. But the economic questions facing 90 crore voters seem to have been pushed to the background by the threat of terrorism following the Pulwama attack. The NDA government is pushing the important economic issues in the background and is hoping to use its muscular nationalism image and PM Modi’s bold narrative of being a decisive leader to tilt the scales in its favour.

This commentary originally appeared in The Tribune.

• Indian Economy
• India
• gender gap
• Inequality
• NYAY

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