On 21 January this year, Oxfam International, a charitable organisation that works towards eradicating poverty, released its annual report on inequality, titled “Private Wealth, Public Good.” The report was released ahead of the World Economic Forum in Davos, Switzerland. It highlighted that, in recent years, the wealth of the richest had increased substantially across the world, while the poorest continued to struggle. It attributed this crisis to governments not imposing enough taxes on the rich while underfunding poverty-alleviating public services such as healthcare and education. Oxfam found that in India, even though the wealth of the top one percent of its earners increased by 39 percent in 2018, the wealth of the poorest in the country increased by just 3 percent.
Shortly after Oxfam released the report, Rohit Inani, a journalist based in Delhi, interviewed its executive director, Winnie Byanyima. Formerly a politician in Uganda, Byanyima has led Oxfam since May 2013. She discussed Oxfam’s methodology, the state of inequality in India and whether the world’s economic model is designed to promote inequality. “Over the last two–three decades, the rich have negotiated themselves out of paying tax on their wealth,” Byanyima said. “The problem is governments giving a pass to the rich … the governments are fuelling [inequality] by not taxing wealth enough.”
Rohit Inani: The Indian government has various social-welfare schemes including those guaranteeing rural employment. But according to your report, wealth inequality in India is growing rapidly. Why do you think this is the case?
Winnie Byanyima: Inequality in India is the outcome of poor policy choices. On the one hand, the government spends [less than] 5 percent of the budget on health—one of the lowest levels of spending in the world—and [less than] 6 percent on social-protection schemes. Other emerging countries like Brazil or China spend far more. It often provides subsidies for the private sector. This means they have a very limited impact on people living in poverty.
At the same time, the government is facilitating a huge accumulation of wealth at the top. While India’s tax system is reasonably progressive on paper, taxes on wealth go largely uncollected in practice. It is worth noting that a large number of India’s billionaires come from rent-thick sectors, such as real estate, infrastructure, mining, telecom, cement and media. [Oxfam describes rent-thick sectors as those closely linked to access to natural resources or dependent on the state for licenses—sectors that benefit from a close relationship with the political class.] And there is, undeniably, a huge problem with corruption that saps resources that could have been spent to address inequality.
RI: India is witnessing jobless growth—the unemployment rate is at a four-decade high. But according to a June 2018 report by the AfrAsia Bank, India has 119 billionaires, and this number is expected to witness a threefold increase by the end of the next decade.
WB: The situation in India is potentially dire. A comparison with China is enlightening. Rapid economic growth in China was very broadly shared, and you have seen the emergence of an enormous middle class of hundreds of millions of Chinese people, who have in turn driven growing domestic demand and job growth themselves. Economic growth in India has been much more unequal, benefiting a small group at the top whilst life for ordinary Indian citizens remains little changed. In the long-term, such a growth model is completely unsustainable.