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People in India live amidst sharp inequalities. This inequality has multiple dimensions and is ever growing. The British rule influenced the Indian society in many respects. The western ideology which is still considered to be superior, took over, bringing about riches to a few and exclusion for the rest.The elite class created under the British rule has taken up the leadership task in the post-independence period. The leaders in the post-independence period have borrowed a western model of growth and the western influence continues to exclude the already marginalised from the growth process.
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   Impact Factor(JCC): 3.6586 - This article can be downloaded from www.impactjournals.us  IMPACT: International Journal of Research in Humanities, Arts and Literature (IMPACT: IJRHAL) ISSN (P): 2347-4564; ISSN (E): 2321-8878 Vol. 5, Issue 9, Sep 2017, 81-102 © Impact Journals DOES INEQUALITY LEAD TO GREATER INEQUALITY IN INDIA? PANKAJ KHANDELWAL & JASMIN Research Scholar, Assistant Professor (ADHOC), Jesus and Mary College, New Delhi, India ABSTRACT People in India live amidst sharp inequalities. This inequality has multiple dimensions and is ever growing. The British rule influenced the Indian society in many respects. The western ideology which is still considered to be superior, took over, bringing about riches to a few and exclusion for the rest.The elite class created under the British rule has taken up the leadership task in the post-independence period. The leaders in the post-independence period have borrowed a western model of growth and the western influence continues to exclude the already marginalised from the growth process. KEYWORDS: Leadership, Post-Independence, British Rule  INTRODUCTION According to the World Bank data on India, in the year 1994 the income share held by highest 10% was 25.98 while that held by the lowest 10% was 3.95, for the year 2010 these shares are 28.79 and 3.69 respectively. Inequality in India, for the period 2000-10 in terms of the income gini coefficient was 36.8. The proportion of population having dietary energy consumption below the 2100/2400 Kcal norm in India continues to rise since 1993-94 1 . The figures point out that the leadership and the policies post-independence have been ineffective. The neo-liberal approach to growth has concentrated on the growth of GNP, however this pattern of growth has been exclusionary. The so called trickle-down effect has been negligible in India. The fact that inequality leads to greater inequality is fairly evident in the Indian society Theoretical Background To understand how inequality leads to greater inequality, analysis of the existing theoretical models will be helpful. The role of one way globalisationand marketization is worth a mention when it comes to exacerbation of existing inequalities. The colonial rule in India brought with it One-way Globalisation. The western ideology since then has been influencing every aspect of life in India. Since 1991, marketization and consumerism have crept into all the economic and social processes. Advertising and strong demonstration effect sharpens the feeling of exclusion among the marginalised (Kumar, 2013, Ch.8). Baran discussed how Marketization, which is seen as a rational and efficient approach,leads to waste 2 . The waste eats up into the surplus which could have been channelized into productive uses (Baran, 1973). The famous Lewis model discussed the expansion of the capitalist sector through continued investments. The model is based on the concept of trickle down. The capitalist sector would develop by bringing about a contraction in 1 Please refer to SAARC Development Goals; India Country Report 2013, Ministry of Statistics and Programme Implementation, Government of India. 2  It distorts the distinction between essential and non-essential consumption, productive and unproductive labour and actual and potential surplus as pointed out by Baran.    82  Pankaj Khandelwal & Jasmin NAAS Rating: 3.10- Articles can be sent to editor@impactjournals.us  the subsistence sector; employment expands in the capitalist sector as capital formation speeds up (Lewis, 1954). However, this model of development applied to developing economies like India has resulted in technological backwardness, lack of investible funds and low profitability in the subsistence sector. Exclusive concentration on the capitalist sector in India has generated the problem of jobless growth leading to backwardness in agriculture and economy-wide inequality (Kumar, 2013, p.193 &194).Even Kuznets U hypothesis shares its foundations with that of the Lewis model (Mazumdar and Sarkar, 2008, p.5 & 6) 3 . Ranis and Stewart argued for a modernising segment within the urban informal sector, which is characterised by firms that employ better technology and produces goods that compete with those produced by the formal sector. The paper, shows that this sector can provide gainful employment in developing countries and overtime as the urban formal sector expands and becomes more competitive, it would absorb the urban informal modern sector and eventually the urban informal traditional sector 4 . Sadly, such a pattern of development has not been seen in India(Ranis and Stewart, 1994) 5 . Foellmi and Zweimuller, explore the relation between underemployment in the less developed nations and income inequality. The high inequality divides the formal sector into mass producers and exclusive producers 6 . In the case of high inequality, there is a tendency to shift towards exclusive production so that high mark ups can be set to exploit the rich. This would lead to greater unemployment since the exclusive producers generate less employment.An egalitarian distribution of income can deal with the problem of underemployment (Foellmi and Zweimuller, 2011). Patnaik highlights the fact that a mere increase in the growth of output does not bring about alleviation of unemployment and poverty. In economies like India, the technology is largely determined by the technological progress in the west. This technology does not affect the overall capital to output ratio much however it tends to lower the labour to output ratio. To bring about growth in an effective sense, economy should be selective in adopting advanced technology (Patnaik, 2003). The presence of black economy leads to failure of macroeconomic policies, rise in unproductive investment and waste. It lowers the rate of investment, while raising the savings propensity. So the multiplier falls, the output and the rate of growth remain below the potential level. Correct estimates of the people below the poverty line and the unemployed cannot be made, which makes the entire policy exercise futile (Kumar, 2005). India has followed a top down approach of growth, where it has tried to imitate the approach of the west to solve its problems, for instance trickle-down effect. In the developing nations a better suited option is to follow a bottom up path 7  (Pham, 2011). In India, the income taxes despite having a progressive structure are regressive in nature 8 . There has been a heavy 3 As the labour migrates from the traditional to the capitalist sector, the real wages might be low to start with and there is a rise in inequality but over time the wages rise and overcompensate for any biases arising out of labour saving technology. 4 However, this depends on the rate of growth of the formal sector, reduction in inequality, favourable production and consumption patterns and technological progress and accumulation in the modern urban informal sector. 5  In India the informal sector largely stays traditional, government policies, inequality, unfavourable patterns of consumption and monopolising tendencies within the formal sector have delayed such a transition. 6  Mass producers set low prices and cater to a wide consumer base and exclusive producers set high prices and cater only to the rich. 7  It recognizes the real problems affecting the people at the lowest strata. 8 This is due to the concessions offered to propertied classes and a small proportion of people in the ambit of direct taxes.    Does Inequality Lead to Greater Inequality in India?   83   Impact Factor(JCC): 3.6586 - This article can be downloaded from www.impactjournals.us  dependence on the indirect taxes to collect revenue. As kalecki argues, Indirect taxes are stagflationary. Indirect taxes offer no stimulus to the system for an expansion in the output, the prices of the commodities rise and the purchasing power shifts away from the people who consume those commodities, primarily the workers. Direct taxes on the other hand, expand output, profits of the capitalists and employment rises (Kalecki, 1971) 9 . An analysis of theories and models gives a clear understanding that egalitarian conditions would give rise to a sustained economic growth and redistribution of income would not necessarily hurt growth. INEQUALITY LEADS TO GREATER INEQUALITY IN INDIA Poverty and inequality have become firmly entrenched within the Indian society. Inequality breeds inequality in India. Colonial rule over India, contributed a great deal to creating divisions in the society. The emergence of colonial rule transformed globalisation in to a one way process 10 . It took over the Indian society by shattering its social and economic structure, implanting advanced technologyand instilling a belief that the western methods were superior in every sense. The British impacted various aspects of the Indian society, which created inequality. Education was largely used as an instrument to establish the superiority of western ideas. The indigenous methods and way of living were considered backward. This form of education resulted in the impoverishment of the mind. The Indian elite class created, served the British interests and treated the rest as inferiors.The plunder of indigenous industrial base, resulted in heavy dependence of the population on agriculture for a living. The British took control of the entire market and infrastructure like railways and ports deepened the penetration. Whatever surplus resulted, was hardly reinvested in agriculture or industrial development. Landlords and property holders were used by the British against the marginal farmers to extract rents. Drain of wealth resulted in a backward agriculture and industrial sector in India.Illiteracy, poor health conditions, poor infrastructure characterised the Indian society in the colonial era. A gap was created between the elite propertied class and the ones at the bottom. The capital intensive technology from the west exacerbated the problem of unemployment and innovation and research in the economy stagnated (Kumar, 2013, Ch. 2) 11 . Independent India’s leadership has had a major role to play in shaping India’s current status. The elite class created under the colonial rule took on the task of leadership. This class was mesmerized by western modernity. The western path of development and top down approach was followed to put India on the road to development 12 . Villages were considered to be permanently backward and were largely left out of the policy ambit; this led to poor conditions in the rural regions even after independence. Self-interest dominated the thinking of leaders. Failure of leadership can be seen in the marginalised sectors as well. The leaders representing the claim of the marginalised groups suffer from lack of spirit to work for the rights of the people they represent. They are happy with the benefits accruing out of the relative political power that they have been able to grab. Leadership has also neglected the long term issues like Education, Health, 9  Kalecki also talks of capital taxation, wherein the profits and the employment rises. Also, the after tax income of the capitalists rises since the inducement to invest stays strong. According to him capital taxation is the best tool to stimulate the economy without raising government’s debt. However, a shift to capital tax is difficult since it would invite strong objections from the politically and economically powerful. 10  Globalisation is not necessarily damaging till the time it’s a two way process, since it involves a flow of goods, people, ideas and culture across borders. 11  The backwardness generated in the colonial era continues to torment the Indian society even in the post-independence period. 12 The fact that such a copied model could not be applied to India given its different conditions was overlooked.    84  Pankaj Khandelwal & Jasmin NAAS Rating: 3.10- Articles can be sent to editor@impactjournals.us  Environment and Foreign policy (Kumar, 2013, Ch. 4). Central Planning was introduced in the 1950s. Setting up of public sector and heavy industrialisation was the development strategy. So investment went into large projects rather than small scale projects 13 . Agriculture became a marginal sector. Reservation and protection was provided to small scale industries, licensing checked the monopolistic tendencies in the private sector, however, big businessmen used power to make their way. Indigenous firms were also protected against foreign competition. The public sector was viewed inefficient due to widespread corruption and slow decision making process. The severe droughts in 1965 and 1967 and the two wars caused a major rupture in the planning process 14 . Green Revolution was brought in agriculture to achieve self-sufficiency in food 15 . However, the benefits went to the already prosperous. The oil shocks in 1970s caused disruption 16 . India experienced balance of payment pressure in 1980s, there was emergence of a debt trap. The success of the South East Asian countries and IMF conditionalities accepted in 1980s, made India, open up. Consumerism crept in; there were increased imports, borrowings rose 17 .Resultantly, there was an economic crisis in 1989-90. This forced India to seek assistance from external agencies like IMF and World Bank and it had to accept their conditionalities, mainly opening up the economy (Kumar, 2013, Ch. 3 & 4). 1991 saw the launch of New Economic policy, which was an approach favouring the markets. 1991 onwards, globalisation in India has taken the form of marketization. Consumerism is being spread through advertisements. The rich are quick to buy these products and a strong demonstration effect instils a desire in the middle and the poor classes to emulate the standards of rich. It is the possession of luxuries and goods that define an individual’s position in the society and this causes distress among poor. In the markets, it is the dollar vote that works. So a person with low purchasing power will automatically get excluded and will barely be able achieve the essentials 18 . Influx of goods and advertisements promote the idea of “More is better”, which accelerates waste. Increased spending on non-essentials is a waste. Costs increase due to unproductive activities like advertising. All this eats into the surplus which could be used for more productive activities. If the consumption patterns of the elite are rationalised there would not be any shortage of resources for development (Kumar, 2013, Ch. 5 & 7). The consumption disparities have been on a rise in India. Considering four basic food items: cereals, pulses and products, meat egg and fish and vegetables, there has been no decline in disparities between the rural rich and poor over the period 1994-95 to 2006-07. When it comes to the non-food items, difference in the consumption of clothing and footwear between these classes, has shown a decline. However, the difference in consumption of durable goods, education, medical services both institutional and non-institutional has shown rising disparity between the rural rich and poor. Privatisation of education and health facilities has added to these disparities 19 . For the urban areas disparities between the 13 This could have helped people at the bottom. The large scale projects also caused displacement. 14 There was a plan holiday between 1966 and 1969. 15 This technology required capital, inputs, fertilizers, pesticides, irrigation and it could have been successful only in the states that had all these requisites in place. 16 There was growing dependence on imported energy. 17 Elite wanted to shift to markets. It was felt that imports would help in technological advancement and resultantly the exports would rise. 18 The regional inequalities within India and international inequalities can also be viewed in this light. 19 Privatization opens up a range of options for the rich, however, the poor lose out on the little aid that they get from the government.  
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