NEW DELHI – In all of the politicking ahead of state elections in 2018, andmore importantly the 2019 Lok Sabha polls, the real state of the economy,irrespective of the failed demonetisation and the GST fiasco, thus far hasbeen largely concealed from the people of this democracy.
The people, of course, especially the poor and middle class know thatthings are bad. They don’t have to read government statistics (many ofwhich are misleading), as the rise in prices of essential commodities isincreasingly obvious. But what is often ignored is the big picture.
Thomas Piketty’s book, Capital in the Twenty-First Century, has become amust-read for every Indian, where the French economist has exposed the lastfew governments, including that of PM Narendra Modi’s.
Now, let’s take a look at some data.
According to Piketty and economist Lucas Chancel, ‘between 1980 and 2014,link>link>Indialink> was the country with the highestgap between the growth of the top one per cent of the population by incomeand growth of the full population’. The well-off are 10 times richer nowthan in 1980. Those in the middle have not even doubled their income.
A new survey by Oxfam also gives credence to the above.
Although the poor who earn below $2 a day (at purchasing power parity,including international standards), have risen to $3, but those getting $3have not matched other countries to increase this to earning $5, or thoseearning $5 a day to rise to $10 a day, unlike in other countries.
Eight in 10 Indians cite inequality as a big problem, as important ascorruption. Although the HSBC (bank) has claimed that nearly 300 Indiansare middle class, some of them make only $3 a day.
Other indices are also revealing and exposes the highly exaggeratedestimate of the middle class. Only three per cent of Indians have ever beenon an aeroplane. Only one in 45 owns a car or a lorry. So as The Economisthas pointed out, “There is a hole where India’s middle class should be.That should worry the government and companies.”
Instead inequalities in link>link>Indialink> are massive. The top one per centof Indian adults, a rich enclave of eight million inhabitants are making atleast $20,000 a year, roughly equal to Hong Kong in population and averageincome.
The next nine per cent, are similar to central Europe, which is in themiddle of the global wealth economies. The next 40 per cent of India’spopulation is similar to its combined South Asian poor neighbours,Bangladesh and Pakistan.
Approximately half a billion are on a par with the poorest peoples ofAfrica. So, contrary to government claims, Indian poverty is well over 50per cent, made worse by the colossal failure of demonetisation.
It is important to remember that India’s mean GDP per head is just $1,700,and 80 per cent of the population makes less than that.
Piketty and Chancel concluded in their recent study that one in 10 Indianshad an annual income of more than $3,150 in 2014. That leaves only 78million making close to $10 a day. To compare this to consumer prices, thelatest iPhone, which costs $1,400 inlink>link>Indialink> , represents half a year’s pay foran Indian who just makes it into the top 10 per cent of earners.
The proportion of Indians making around $10 a day hardly shifted between2010 and 2016. In other words, the middle class is stagnant, despitegovernment and neoliberal propaganda. But to get into the top 1 per cent ofearners, an Indian needs to make just over $20,000 a year. But to be ableto afford goods sold at the same price across the world like Netflixsubscriptions or Nike trainers, more than 99 per cent of the Indianpopulation ate in the same league as Americans that count as below povertyline, around $25,000 for a family of four.
But what about China? Isn’t link>link>Indialink> catching up? No.
From 2002, China grew at above eight per cent for 27 quarters in a row.Only three of the past 26 quarters hadlink>link>Indialink> growing at about that pace. Andwhat about socio-economic statistics? Well, 38 per cent of children getfewer than six years of schooling, and one in nine is illiterate.
Poor diets have resulted in 38 per cent of children under five years whoare so underfed as to damage their physical and mental capacityirreversibly, according to the Global Nutrition Report.
This is the real Indian political economy, with statistics and horrifyingfacts suppressed, ignored by the ruling elite.