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Economy

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September 30, 2017

Growing inequality is one of the world’s seven biggest threats mentioned in the recent 72nd U.N General Assembly’s statement. Analyse India’s economic growth in that context.

Refer - Business Standard

 

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IAS Parliament 6 years

KEY POINTS

·        The richest 1% of the world’s population now control up to 40% of global assets, while the poorest half owns just one per cent.

·        Despite, India’s high growth rate, its people still suffer from the menace of economic inequality.  

·        The richest 1% of Indians now own 58.4% of the country’s wealth which makes India the highest unequal country in Asia.

·        High economic growth rates are not reducing inequality.

Factors causing Inequality

·        Market deregulation and liberalization – unregulated market forces and unmindful liberalization drives the concentration of wealth and fuels the extreme inequality.

·        Skewed growth pattern – disguised unemployment in slow growing agriculture, more number of skilled jobs in emerging service sector.

·        High unequal asset distribution – concentration of agricultural lands in the hands of few big landlords.

·        Inadequate employment generation (increase in employment opportunities remained less than the rise in the labour force)

·        Less government spending on Health and education with respect to growing GDP.

·        Differential regional growth.

·        Absence of ground level representatives in order to discuss about inequality, instead narrow interested elites will work for their self gains. 

Solutions

·        Reducing asset inequality through redistributive land reforms through ceiling on land holdings and inheritance taxes.

·        Raise taxation for the wealthy.

·        Push for multilateral institutional framework to oversee the global governance of international tax matters.

·        Increase government spending in public services and social protection schemes.

·        Ensuring that governments and institutions represent citizens rather than organized business interests.

·        Strong agriculture-friendly policies that benefit both small farmers and landless workers, in order to curb distressed migration from rural areas.

·        Urban growth has to be based on labor-intensive industrialization, so that enough jobs exist for both people who leave rural areas and the millions working in the informal sector.

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