Trivialising the equality debate

That India is among the rare exceptions in the Global South which has embraced privatisation and globalisation without a major economic crisis is a fact often not appreciated enough. It is also the fastest growing major economy in the world and will emerge as a key driver of global growth. Indian democracy can rightly take credit for these achievements.

These two positives about India’s economy, and by extension, its politics should not distract us from the fact that the economy has, so far, failed to move its workforce from low-income farming to well-paying non-farm jobs. The window to do this, given India’s demographic transformation, will close soon. Rising capital intensity in most high value sectors has made generating better paying jobs outside farms more difficult today. Growing trade protectionism across the world will make export-led growth more difficult. Meeting these challenges should be the focus for the political class. It is on this front that the ongoing polemics between the Congress and the Bharatiya Janata Party (BJP) are deeply distressing.
The Congress, after its crushing defeats in 2014 and 2019 elections, seems to have decided that populism without any concern for fiscal prudence or even larger salience is the way forward. Its strategy of selling the caste census and doing away with the 50% cap on SC-ST-OBC reservations is exactly that. Such plans, even if implemented, will only tweak the existing distribution of jobs rather than solve the larger structural challenges described here. The BJP, which is clearly aware of the generalised economic discontent over India’s inability to generate quality jobs, knows that the Congress’s populist trick can gain traction if left unchallenged. However, it has decided to counter this by making it a Hindu-Muslim issue rather than approaching it from a non-polarising, macroeconomic viewpoint. Nothing could be a bigger disservice to India’s inequality debate. In an ideal world, the debate in India should be focused on three key points.
One, India is not at a stage in its economic transformation where it can prioritise redistribution over growth. The size of the cake is just not big enough to tend to the needs of 1.4 billion people. Even if India were to implement radical ideas such as inheritance tax, they would not generate the resources needed to pull everyone up to a decent living standard. Policy/political adventurism must not spook enterprise and private capital.
Two, this does not mean that capital or profit maximisation should override all democratic concerns. Grassroots mobilisation against their excesses or breach of rules must be strengthened to make sure there is a healthy dialectic between growth and the fight against inequality. Almost all political parties are conspicuous by their absence in such struggles on the ground.
Three, the growing obsession with using fiscal resources to support the incomes of the poor, notwithstanding their good intentions, is increasingly coming at the cost of investment in institutions which could be the biggest weapons in the fight against inequality. The proliferation of high-cost private services in areas such as health, education and the collapse of State-owned extension services in key areas such as agricultural R&D are the examples of this crisis. The reasons for this are not difficult to understand as politicians find it much easier to transfer money to voters rather than take on the challenge of dealing with institutional inefficiencies and sabotage.