Herald View: Survival of the richest - The India story

Even at the risk of offending some people, let’s replay that sharp-witted, often-repeated Aaron Levenstein line on statistics. The American academic once famously said: ‘Statistics are like a bikini—what they reveal is interesting, but what they conceal is vital’.

You wouldn’t have missed the ‘India Shining’ headlines that unerringly pop up in election season, headlines quoting macroeconomic statistics that have you think the Indian economy is on a roll.

Take for instance the World Bank’s latest India Development Update (IDU), its flagship half-yearly report on the Indian economy.

It says: ‘Despite significant global challenges, India was one of the fastest-growing major economies in FY22-23 at 7.2 per cent. India’s growth rate was the second highest among G20 countries and almost twice the average for emerging market economies.

This resilience was underpinned by robust domestic demand, strong public infrastructure investment and a strengthening financial sector. Bank credit growth increased to 15.8 per cent in the first quarter of FY23-24 compared with 13.3 per cent in the first quarter of FY22-23.’

Other reports point out that the government’s GST (Goods and Services Tax) collections are rising. Corporate profits are higher. The capital expenditure budget has gone up from 1.6 per cent of GDP in 2019 to 2.7 per cent in 2023, indicating higher expenditure on infrastructure development.

There’s more: the number of dollar millionaires in the country is projected to double by 2026 and the number of dollar billionaires in the country has risen to 169, higher than all other countries save the US and China. The waiting list for luxury cars is apparently getting longer and the demand for luxury apartments that cost upwards of Rs 15 crore is growing. You may even have heard of the stampede in malls for Apple iPhones made in India. Sounds good, right?

Now consider what these statistics conceal.

Unemployment in India is at an all-time high while concentration of wealth at the top is back to pre-1947 levels. Savings and investment rates are at a 20-year low. Household savings are down and household borrowings are up, with indications that people are borrowing to simply stay afloat.

The government may have dissed the World Hunger Index rankings—it placed India at an ignominious #111 among 125 countries—but a free-ration scheme for 800 million Indians tells another story.

While the luxury segments of the economy are growing, rural demand is markedly depressed, as seen in, say, the decline in sales of two-wheelers and tractors. While 10 per cent of Indians have steady and even rising incomes and continue to aspire to a better life, for the rest, survival is still a struggle.

Published in January this year, an Oxfam report, rather perceptively titled ‘Survival of the Richest: the India Story’, noted that the combined wealth of the 100 richest Indians had touched Rs 54.12 lakh crore—an amount that could fund the entire Union Budget for more than 18 months.

These findings corroborate the World Inequality Report 2022, which had flagged India as one of the most unequal countries with yawning income and wealth disparities. Said income gap between India’s rich and poor has been increasing over time.

As per the report, the income of the top 10 per cent of India’s wage earners is 20 times more than what the bottom 50 per cent earn. It is this creamy layer of the top 10 per cent of wage earners, holding about 57 per cent of the country’s income, who seem to be driving demand, consumption and India’s so-called growth story.

The concentration of wealth is even more stark: while the top 1 per cent of Indians hold 22 per cent of the total national income, only 13 per cent rests with the bottom 50 per cent. The Oxfam report has yet another startling figure: between 2012 and 2021, 40 per cent of the wealth created in India has gone to just 1 per cent of the population and a meagre 3 per cent has reached the bottom 50 per cent.

A UNDP report this year spoke of poverty concentration in states that are home to 45 per cent of India’s population but house 62 per cent of its poor.

India’s economic growth story is not for these poor sods. For them, we have election-time doles.