Billionaire India: Worse Off Than Sub-Saharan Africa?
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.
Billionaire India: Worse Off Than Sub-Saharan Africa?
- » Published on March 09, 2007
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Author: Wondering Man
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