OPINION

Billionaire India: Worse Off Than Sub-Saharan Africa?

March 09, 2007
Wondering Man

Well, India indeed happens to be a fascinating nation - the more one sees it, the more one gets mesmerized by its sheer diversity. And many of us, Indians who see India closely, wonder about the true identity of this country in the global landscape of nation-states.

For a long time, India took the center stage in something called 'Non-aligned Movement' (NAM) with many other 3rd world countries from Asia and Africa. I am not sure what has happened to NAM, because I haven't seen NAM in global media for quite some time, and the word 'alignment' also needed redefinition after the collapse of erstwhile Soviet Union. Those were the days of 'Nehruvian Socialism', 'Hindu-growth rates' and falsified idealism.

In mid-70s, there was 'Garibi hatao' (Abolish Poverty), and in 2004 it was 'Aam Aadmi' (the Common Man) campaign that the Congress, the party behind the present ruling coalition government, had in election campaigns. The result of the former, if it can be concluded after almost three decades, is for any to see when 70% of Indians live below $2 a day and more than 30% below a dollar a day.

And incredible India has again shown incredible results with the present 'Aam Aadmi' government, as India continues shining in the global billionaires list published by Forbes recently.

Japan, with its size of nominal economy more than five times that of Indian GDP, and population of less than 1/8th, has 24 billionaires (combined net wealth $64 billion) whereas India has 36 billionaires (combined net wealth of $191 billion).

Let's look at what Forbes list of billionaires means for India through some simple measures and ratios:

Billionaires' wealth in India as a % of GDP = 25% (excluding L N Mittal, this would still be closed to 22-23%); and probably the highest in the world.

Billionaires wealth in the world as a % of global GDP = 6-7%

Billionaires wealth in Japan as a % of Japan's GDP = 5%

Billionaires wealth in the U.S. as a % of U.S. GDP = around 12-13%

India's share in global GDP = 2%

Indian billionaires share in combined billionaires (globally) net wealth = 6%

India's population share globally = 17%

Per capita income in India (nominal) = $700

Per capita income (global, nominal again) = $7000

India happens to be the fourth largest (nominal) economy in Asia, and in terms of per capita income (GNI), India ranks poorer than Sub-Saharan Africa. A flow of reports lately have shown that on most of the parameters of Human Development Index, India ranks at the lowest rungs of the ladder, and much worse than nations from Sub-Saharan Africa.

So without much research, one may not be that off-the-mark in stating that the 8-10% growth that India has seen in last four years has been able to increase exponentially the net-wealth of the rich rather than the common man. Their wealth may be growing by more than 30-50% (or even higher), whereas majority of these (1.1 billion people minus this few billionaires and few more millionaires) struggle to survive.

And one wonders on the composition of our society when our GDP reaches couple of trillion dollars (nominal) over next few years with billionaires wealth hitting even higher percentage as evident from last few years.

How high can that eventually get? When can we say enough is enough?

Nothing wrong in it when one gives up the hypocrisy and says India offers the best opportunity to grow wealth fastest for the people who already have wealth. Capitalism, business, investment demands that as we understand with our common sense.

Contrary to that, our Finance Minister and our Prime Minister forces 'Aam Aadmi' Indians in the so-called 'race to the bottom' where states indulge in an endless race of tax concessions, sops to even subsidizing land. Race to the bottom have been played before globally, and proved to benefit the rich at the cost of the poor.

Our Prime Minister argues, even in today's paper, for giving even more incentives to the SEZs, as if existing rate of wealth creation isn't adequate from above facts, and he fears capital would fly elsewhere. So each nation does that, each state does it and then each nation, each state and each district sells out to the rich and the famous and don't collect enough money to invest in health, education, infrastructure.

One may be tempted to ask our Havard-educated Finance Minister and our Oxford-Cambridge-educated Prime Minister that at which point they believe that doling out more incentives to the billionaires should end - be it in the central policies or in state policies. And they should answer who bears the costs for those incentives (add with that Government inefficiencies).

Take the stock-market casino where capital gains is tax-free for long-term capital gains (and how most FIIs and so-called rich do 'manipulate' it as insiders would know); take the Singur project where the state subsidizes land acquisition for a private project with citizen's money, that too without transparency; take in our various national and state-level industrial policies which clearly show the rich always indulge in hard-negotiations with our Government to make investments by getting concessions to subsidies to run their business.

Sorry, Dr. Prime Minister, 'inclusive growth' with these policies would remain another slogan, and wishful thinking of your policy-makers. 21st century policy-making need not be copycats of earlier models and look for the panacea called 'growth' ignoring the effects of growth on society.

On the other hand, globally if there is one thing that's in excess supply it is easy money and liquidity (capital). We have seen 'yen-carry' trade in Japan, and after a small blip, the practice is likely to continue. So one can (and many did) borrow yen, as an example, invest in land in India and make billions - and Government facilitates that land-acquisition by not even paying a market price to our Indian farmers, rather forcing them to sell.

If there is anything in short-supply, it's the natural resources; and mostly land. The world knows that well, and importance of land can't be overstated for the 2nd most populous country with less than 2% of world's land. Let Government privatize its PSUs, nothing wrong in that (rather better) but don't force - I repeat don't force - someone to sell his/her own land, that too at a dictated price.

Our 'Aam Aadmi' government has produced a few more billionaires in our real estate firms at the cost of millions of farmers. Farming land can be taken for industrialization just like a building owner collects rents for his buildings. And there's been a report of a successful model like this working near Pune where land-owners become leasers and thereby partners than are forced to sell-out their lands against 'credit' money.

What's more worrying is the fact that politicians, policy-makers, mass-media all needing money again continues to ignore these glaring facts of imbalances, and play the beats that our rich loves to hear. Rapid growth anywhere leads to imbalances (Gini-coefficient, a measure of equitable growth, is more in socialist China than in Capitalist US, showing more inequality in China). Acknowledging the fact, China lately has embarked into massive equitable-program to sustain social harmony. And the world takes China seriously because it so far did what it promised; unlike Indian Government (where growth is again more external-driven, and despite our policies).

The danger India has is that its vast majority of undernourished, underfed, undereducated, underprivileged people can very well be forgotten. We know the size of any large market with Europe and the US, where 300 million people with some buying power means huge markets. Marketers, with policy-makers aid, would address these 300 million Indians than care about another 800 million Indians. And from these 300 million Indians itself, one can make enough money for enough years so that the urge to expand the market in a country like India may not be there.

It's the same 'low hanging fruit' concept that market forces have traditionally shown, and expected to show. True, eventually few from those underprivileged sections would also come to be defined as 'low hanging fruits' in marketers' eyes; but that would be a very slow natural process for a country like India.

Indian rich and middle-class comprises that low-hanging fruits; whereas rural India, tribal India, poor India lives truly in inaccessible India in its remote corners.

Incredible India already presents Manhattan to Somalia in its commercial capital Mumbai alone; one can only imagine what Incredible India would offer to its own two-classes of citizens when India indeed becomes a global 'hypothetical' superpower following same set of policies.

One can sincerely be optimistic that India won't ban its 2nd class-citizens to live in that 'hypothetical' Superpower India, because in the end, someone needs to be fooled continuously so that they vote, keep faith in democracy, and help the rich grow even richer at the cost of the poverty of the vast majority of Indians.

Ranjit is a Research Scholar with Indian Institute of Technology, Kharagpur, India; and is the author of the book Wondering Man, Money & Go(l)d. He can be reached at ranjit.goswami@gmail.com
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#1
Atlantean
URL
March 9, 2007
10:29 AM

Sigh!

Indians have this idiotic habbit of seeing things in categories. They see for example, a category of billionaires and another category of the poorest of the poor and draw links between these two categories. All the problems and miseries experienced by people belonging to the second category are blamed on the first category.

Their susceptibility to this kind of nonsense has more than ensured that 15% of all humanity stays in poverty and never comes up for more than 50 years now after independance. The people who say they are speaking for the poor are the ones who are most susceptible to this nonsense. What's more, they want others to believe all their crap!

Fortunately, there are many Indians who dont fit the above profile. They are far more broadminded, positive and forward looking. They put their common sense to good use. They dont see things in categories like the usual narrow minded-socialist leaning-poverty hating-yet unconsciously poverty seeking Indian.

They understand for example, that for every billionaire's success, there are hundreds of thousands of common people who benefitted from this success, from the sweepers and electricians to the CEO. And these are not the filthy rich-greedy-profit seeking-care a damn about the poor billionaires to whom governments give stolen-from-the-poor-subsidised-sold-at-less-than-market prices land at lower than market prices. Most of them belong to the lower middle class. They WORK HARD and pull themselves up (and dont just sit in their comfy cushioned chairs in AC rooms in front of latest computers with the fastest Internet connection and rant and rant against the "greedy capitalist" and shed tears for the poor and underpriveleged.) The last 16 years have seen millions of Indians migrate from the bottom into this lower middle section and more and more will join it as the economy grows and provides more jobs and opportunities.

With economic reforms in agriculture and expansion of economic activity into II tier, III tier towns and further into rural areas and with the rapid spread of infrastructure, the situation is going to get much better. At last, the malnourished and bony rural Indian can throw his rusted bowl in the new plastic waste basket and buy a new stainless steel plate and have good nutritious food and not the smelly and rotten mice filled food supplied by the oh-so-great-and-caring-for-the-poor-socialist-Indian state through the PDS, finally grow some muscle and put his previously emaciated ass to better use on the field and produce more food and therefore income for himself.

Meanwhile, the narrowminded pigeon brained intellectually challenged Indians can keep on writing their ideologically and politically motivated shit on the MSM and the Internet. They're not going to stop the rapid decrease of poverty in India.

And yeah, I expect everybody to pounce on me and beat me up for my rightist views. Dont bother to. You can call me arrogant and all sorts of names. And I care a damn... I give a rat's ass.

Good bye!

#2
Chandra
March 9, 2007
11:34 AM

Atlantean

Good show!!!!


Ranjit

I agree with you, Dr. Manu, Madame Italy and Mr.Dumbaram are morons of the highest order. The sooner the Govt goes the better. I hope you guys in West Bengal get rid of the commies. Those guys are another set of morons.......

Cheers to right wingers, Cheers to supply siders!!!!!

#3
BantulTheGreat
March 9, 2007
03:03 PM

What a rona - dhona commentary. The usual weepy stuff that rich are getting richer and the poor poorer. The comparison with sub Saharan Africa (a very common theme amongst weepy elites) is questionable. How good is the data collected from Sub Saharan Africa? Is it as good as the one collected in one of our neighbouring nation's where per capita income grows from $600 to $840 in one year just to compete with India or population growth rate falls from 3.6%% to 2.1% in one astonishing year? And how trust worthy are data collected by an useless organization like NSSO and other statsitsical organizations in India filled with left wing morons. Everybody knows that they manufacture data and statistics as dictated by leftist intellectuals of the JNU type. And what is the agenda of the leftist intellectuls of India. The answer is to show India in a poor light. Get rid of hypocrites like Jayati Ghoshes and but in Mr Bhallas and India's stats will run on a bullet train. Well not that Bhallas are any good. But that is just to show that Indian statistics show a much worse picture than reality thanks to lazy, trade unionized, babus of the left variety filling up weepy sheets and taking paychecks for no work at the end of the day.

Of course India can do better. This is what the Leftist intellectuals will have to do to improve India. 1) They will have to stop their opposition to family planning. 2) They will have to stop their support of illegal migration. 3) They have to stop dividing the nation on caste and religion (yes communists are the biggest communalists in India) 4) They have to stop calling strikes at the drop of a hat. 5) they have to stop supporting their trade union leaders who never do any work. 5) They have to start loving India and accept the integrity of the bouandaries of India. 6) They have to start working for the welfare of all Indians. 7) They have to accept that they have no clue about how to run an economy. 8) They have to accept that nothing positive can come from leftist intellectualism which is basically weepy talk about the poor while smoking expensive cigars and drinking expenisve wine and accumulating frequent flier miles while collecting socialist awards.

Cheers!

#4
Alan Coman
March 9, 2007
09:00 PM

I am surprised to see this marxism from an educated person. I will be surprised to find out that this guy is an economist.

Milton Friedman said in 1979 that a free market produces less extreme cases of wealth and poverty vs. a repressive state without freedom.

The facts presented in this article show that this is a fact, but the author commentary and his policy recommendation are simply idiotic.

I think that China made a mistake to redistribute wealth from the richer (more productive citizens) to the poorer (less productive ones). India is already a relatively socialist and corrupt state. Add to this government intervention and you will see the 8-10% growth transformed into 3-5 or less. What if these 24 billionaires will decide overnight to move to Switzerland? This guy will cheer their departure, since there will be less inequality and less rich stealing from the poor. It is clear that he is wrong.

If you want to help people at the bottom, the best way is to encourage free market and low taxes. In the long run a very poor country can catch up with any other rich one. Think about the asian tigers in the 70's and Ireland now.

You need indeed education, infrastructure and health, but making this a public system is a waste of resources. It is better to let the agents invest in their own education ( govt can help by providing loans), use toll roads and private insurance system in health. In time this is the best way. The way the system is currently is not efficient and encourages graft and corruption.

#5
Sanjay
March 9, 2007
09:55 PM

"Enough is enough"????

Get real. When they're counting Indian billionaires, they're also even counting people like Lakshmi Mittal, who made all his money outside India. What does he owe India or Indians, who never did anything for him?

Next you'll be complaining that India should collar those "pesky NRIs" and force them to fork over their hard-earned money to "share with people at home". Nah, that sort of sounds like how LTTE shakes down emigre refugees, to extort funds from them.

If the forgotten Indians want to get more from the world, then they need to make themselves more appealing to the world, instead of asking the world to make itself more appealing to them (which it won't, just like how the oceans won't part for Indians, nor will gravity suspend itself for Indians, nor will the rains and the seasons magically stop for Indians.)

#6
blokesablogin
March 9, 2007
10:25 PM

whoa- take it easy!! Life is indeed full of such contradictions! For the mountain to be validated, the valley needs to be right next to it! Such too is the case with the billionaire and the bikhari!!

#7
Anamika
March 9, 2007
10:42 PM

Not particularly high on the economics logic but lets leave that aside for the time being.

Remember the "glory" days of American capitalism when men like Tisch and Rockefeller made their fortunes? Guess what! Much of the US was "living in poverty" at the time. Remember 19th century Europe when MAJOR fortunes were made? It was the time of the dead-poor chimney sweeps and dying matchgirls.

I find this double standard very worrying - yes, economic development takes time and isn't absolutely even. But why is it that India - that PRIOR to European colonization contributed nearly 30% to the world GDP has to meet unrealistic and special standards NOW when it is trying to recover by joining the industrial economy?

#8
Jong
March 10, 2007
01:26 AM

where incompetent ignoramuses such as laloo (bihar) and the communists rule (w.bengal) are definitely worse of than africa. other states with better governance are in healthier condition.

#9
PURUSH
URL
March 11, 2007
06:39 AM

Billionaire India: Worse Off Than Sub-Saharan Africa?

Desi Critics? Sure, you are the real [EDITED - EVIDENTLY YOU LACK A COMPREHENSION OF THE DIFFERENCE BETWEEN THE AUTHOR'S VIEWS AND THE SITE'S, AND FURTHER, THE ABILITY TO KEEP A CIVIL TONGUE IN DISCOURSE]


#10
Wondering Man
URL
March 14, 2007
02:15 PM

Well, thanks for the valued feedbacks. For a healthy society, we need to disagree more often on complex issues than to agree, more as bloggers with independent minds for a better society. I have attempted clarifying my stand based on the feedbacks in the next article, 'The need for having a Government'here...

http://desicritics.org/2007/03/13/024918.php

#11
bharath
URL
March 15, 2007
12:29 AM


I will take the position of Amartya Sen on it. India has much better freedoms than Sub-Saharan Africa. So all the development in India is likely to be more robust and well-secured. Whereas in Sub-Saharan Africa, every statistic can change upside inside of a week.

#12
bharath
URL
March 15, 2007
12:33 AM

I will point to Aln Coman that India recently passed RTI- right to information act with great success. We should be proud of the grassroots involvement and success story hidden behind this.

#13
Sujai
URL
March 15, 2007
05:22 AM

While I welcome the increase in the number of billionaires, which proves that we allow people to aspire and succeed, we need to look at the other side of the story- less than ten individuals' wealth is more than one-fourth of a nation's GDP.

That's too lopsided.

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