Growing Economic Inequalities, Impact & The Way Forward-Prof. Arun Kumar, Retired Professor of Economics at JNU Speaks At Ludhiana.
Ludhiana 12-02-2025
An impressive seminar at Ludhiana was jointly organised by Social Thinkers Forum, PAU, Ludhiana Employees Union and PAU Pensioners and Retirees Welfare Association. Prof. Arun Kumar, retired Professor of Economics at JNU spoke on the subject: “Growing Economic Inequalities, Impact & The Way Forward”.
The seminar was well attended by city’s teachers, economists, scientists, bankers and others. The gist of Prof Arun Kumar’s views runs thus:
On the eve of every election there is talk of inequalities and redistribution. So was there also before the recent 2024 general election. Inequalities are growing and these are complex issues. In fact, inequalities are quite stark and multifaceted and diverse in India than elsewhere than even in Europe. There are different forms of inequality in India, across castes, communities and regions, across capital and labour, organised and unorganised sectors, agriculture and non-agriculture, and rural or urban areas and in many more ways.
In addition, there is a hierarchy of Wealth Inequality, which is greater than Income Inequality and which is greater than Consumption Inequality -which we normally refer to ignoring the former ones. We always mostly talk about consumption inequality.
Inequality often considered as a natural phenomenon or result of circumstances, but this in fact depends on the prevailing economic system. It also depends on government policies. Inequalities have increased due to the adoption of ‘Trickle Down’ policies. Indian elite in control of power since Independence has mostly been self-serving. Its goal has been to quickly catch up with the Western Elites (Become Westernized) – calling it ‘modernization’. The image created is that the whole country benefits by modernisation, but it is not so. It went for expanding the comparatively developed sectors of the economy furthermore, leaving the backward sectors to fend for itself. Neglected sectors are agriculture and Micro and Micro most even in the MSME sector. We chose ‘trickle down’ policies with an urban and pro industry bias. Unfortunately, given the technology gap between the advanced and the backward sectors of the economy, there has been little trickle down. The term, trickle down itself suggests a widening of inequality. Agriculture and micro-SMEs are the most neglected. Micro Sector is 97.5% employment giver in the MSME sector and they are in unorganised sectors to whom Demonetising and GST have killed brutally which was accentuated by Covid lockdowns.
Since 1991, the government has pursued a policy of growth at any cost, which has burdened the marginalized people and has also impacted very badly our environment. The Pro-Businesses Economics mostly has increased inequalities by promoting big business at the expense of the micro units and the marginalized whose entities are getting destroyed as they are unorganised . Thus, a dual growth curve has emerged. The unorganized sector has been developed as a slave to the organized sector and data and policy about this large unorganised sector are also missing.
The growing black-market economy in India has contributed to increasing inequalities along with increasing profits for such players. It also reflects the failure of policies that work against the interests of the marginalised. The deteriorating quality of service in public utilities speaks volumes. And to large scale tax evasion the gathering of resources for public welfare tasks/utilities it has suffered much. All this adversely affects the interests of the marginalised.
The investment model is heavily tilted in favour of the organised sector, leading to rising inequality through productivity gaps. New technologies being introduced are leading to mechanisation in agriculture and automation in industry and services. Labour is being displaced on a massive scale, resulting in fewer jobs.
A reserve force of workers is being prepared in the ‘contract work’ model, which helps keep wages low. Technology blurs the idea of the future vision and drives human beings towards immediate small gains and this all weakens our compassion and efforts to end inequality are nullified. These factors lead to large scale unemployment and consequently even some workers who are having jobs are being pushed into poverty. This has manifested in the form of family/societal inequality. Inequalities are now being tolerated in the society due to the changed philosophical environment based on religion in the country and in the world. Market policies take over. As a result, people are only thinking in economic/business terms and not about the social aspects of life. Hence, equality no longer matters to the so-called rational person, who in order to increase their business profits can go to the extreme limits of minimising all costs be it reducing wages or poor quality of merchandise.
Indian Policy makers have been self-serving and deliberately non-transparent. They have pursued trickle down and `supply side’ polices all along. The opening up of the economy has further marginalized the majority of Indians and led to rising inequality. It has taken Indian economy into the grip of International Finance Capital and truncated sovereignty. Alternatives need to be worked out including how to face the challenge of the global financial architecture. Consequently, inequality has been on the rise and equity has been removed from the political agenda on various pretext. To address these concerns, a new paradigm is required with a changed political economy. So that there is greater employment generation and real growth.
All the above factors need to be considered in order to reduce inequality in the country.