India’s economic system rigged in favor of the super-rich, says Oxfam report

As 84% ​​of households in India suffered a drop in income in a year marked by huge loss of lives and livelihoods, the number of Indian billionaires rose from 102 to 142, revealed the India Supplement to the 2022 Oxfam Davos global report, Inequality Kills. The report was released on Sunday, January 16, ahead of the World Economic Forum’s Davos schedule.

The report says a simple 1% wealth tax applied to India’s 98 wealthiest billionaire families can fund Ayushman Bharat, the Indian government’s national public health insurance fund, for more than seven years. He added that the collective wealth of India’s 100 richest people reached an all-time high of INR 57.3 lakh crore (USD 775 billion) in 2021.

The report pointed out that in India, during the pandemic – between March 2020 and November 30, 2021 – the wealth of billionaires increased from Rs 23.14 lakh crore to Rs 53.16 lakh crore. Meanwhile, more than 4.6 million Indians are estimated to have fallen into extreme poverty in 2020, nearly half of the world’s new poor according to the United Nations. “High wealth inequality in India is the result of an economic system rigged in favor of the super-rich over the poor and marginalized,” the report said.

Amitabh Behar, CEO of Oxfam India, said: “Oxfam’s global briefing highlights the stark reality of inequality which contributes to the death of at least 21,000 people every day, or one person every four seconds. The pandemic has established gender parity from age 99 Women collectively lost INR 59.11 lakh crore (USD 800 billion) in income in 2020, with 1.3 crore fewer women in work today than in 2019. It has never been more important to start righting the wrongs of this obscene inequality by targeting extreme wealth through taxation and pumping that money back into the real economy to save lives.

PERMANENT DEPENDENCE ON INDIRECT TAXES

The report points out that historically, India has always been more dependent on indirect taxes. In 2000, the percentage of indirect taxation in total tax revenue was 63.69%. “Unfortunately, even during the pandemic, this trend has continued as government revenue has remained heavily dependent on indirect taxes, particularly the tax levied on the sale and manufacture of goods and services upon which ordinary Indians depend,” he said. he declared.

Oxfam India’s briefing shows the trend that excise taxes as a share of Union government revenue have increased while there is a decline in the proportion of corporate tax for the same over the past four years. The additional tax imposed on fuel has increased by 33% in the first six months of 2020-21 compared to the previous year and is 79% higher than pre-Covid levels, he pointed out.

Wealth tax for the super-rich was abolished in 2016. Corporate tax was lowered from 30% to 22% to attract investment last year resulting in a loss of Rs 1, 5 lakh crore, which contributed to India’s income tax increase. deficit. “These trends show that the poor, marginalized and middle class have paid high taxes despite the raging pandemic while the rich have earned more money without paying their fair share,” Oxfam said.

The report states, “Not only have indirect taxes been used to fund India’s COVID-19 recovery, but the Center has also delegated its responsibilities under the Disaster Management Act 2005 to state governments. Unfortunately, Indian state governments were unable to cope without the necessary infrastructure, both human and physical, and adequate financial resources.

He added: “The data shows that the policies of the Union government were, and continue to be, structurally designed to undermine the state-run federal structure of India by creating dependency on the central government’s regard for technical expertise and financial support. Although health is a state subject, the Center has kept more resources in non-dividable pools rather than delegating them to manage the pandemic.”

LACK OF FUNDS FOR PUBLIC SERVICES

The Supplement for India highlighted the de-prioritization of education and health in the Union government budget when these two services were most needed. The health allocation in 2021-2022 has seen a 10% decrease from the previous year in the Union budget, while the education allocation in 2021-22 has registered only a 10% increase over the previous year. As a percentage of GDP, health spending has remained extremely low at 1.2-1.6% and has only increased by 0.09% over the past 22 years. As a percentage of GDP, spending on education has remained low at 3% and has grown by only 0.07% over the past 18 years.

Expenditure on social security schemes for workers under the Ministry of Labor and Employment and the centralized National Social Assistance Program scheme is extremely low, at 0.6% of total expenditure in 2021-2022, a decrease from 1.5% of total expenditure over the previous period. year. “With 93% of the country’s workforce comprised of informal jobs, there has been little success in bringing them into formal employment, which would give them various benefits such as paid vacation, health insurance, paid maternity leave and a pension,” the report said. noted.

PRIVATIZATION OF BASIC SERVICES

The report also pointed out that the political push for privatization of health care and education in India is further acting as a catalyst for inequality. “The growing privatization of school education disproportionately affects the country’s poor and marginalized, especially women and girls,” he said.

The India supplement shows that the high cost of private health care affects marginalized communities, mainly due to its high costs and further widens inequalities. Data from the 2017-18 National Sample Survey (NSS) shows that out-of-pocket expenditure (DOP) in private hospitals is almost six times higher than in public hospitals for inpatient care and two or three times higher for outpatient care. The average OOPE in India is 62.67%, while the global average is 18.12%.

WHAT IS THE WAY FORWARD?

Oxfam India has made several recommendations on the measures to be implemented. He said India needs to better track the impact of policies by improving measurement mechanisms. “It is imperative to start disaggregating more public statistics by income and to introduce regular data collection on income and wealth inequality while ensuring that this data is freely available in the public domain,” said he declared.

He also urged the Union government to reintroduce a wealth tax to generate much-needed resources to fund the recovery from the pandemic. He said, “The tax compliance of wealthy people also needs to be significantly improved, instead of imposing indirect taxes on India’s poor and middle class. Evidence shows that the threat of an audit has the most pronounced effect on compliance and can be complemented by shaming tax evaders or imposing penalties and should prevail over a reduction in indirect tax rates which has ambiguous effects on compliance and negative effects on revenue.”

Oxfam India also highlighted the importance of generating revenue to invest in education and health. The report pointed out that a temporary 1% surcharge on the richest 10% of the population could help raise an additional Rs 8.7 lakh crore, using the education and health budget.