Wealth : Redistribution or Destruction?

Economic inequality is an age-old global phenomenon that is often discussed in correspondence with the topic of poverty. The relationship between economic inequality and poverty is considered symbiotic. In other words, poverty arises because of economic inequality and the latter thrives because of the former. The perfect yet unpopular antidote to both these problems is wealth generation through empowerment. Government, as a public welfare entity, must create avenues through which people, especially those living below the poverty line, can rise up the socio-economic ladder. Apart from creating avenues for economic empowerment, it is the duty of the government to act as an enabler in providing basic amenities to those who are devoid of it.In Bharat, schemes such as PM MUDRA Yojana, PM Svanidhi Yojana, PM Awas Yojana, PM Garib Kalyan Yojana and Jal Jeevan Mission are part of a long list of schemes that have provided the citizens an opportunity to rise up the social ladder by providing basic amenities such as housing and at the same time provide with credit at low interest rates. The result of this is that around 24.82 crore Indians have escaped multidimensional poverty in the last 9 years. There is a steep decline in Poverty Headcount Ratio from 29.17% in 2013-14 to 11.82% in 2022-23..On the other hand, speaking of wealth generation, India is home to 111 unicorns with a total valuation of USD 349.67 billion as of October 2023. However, a prominent Opposition leader recently stated that, if they come to power, they would conduct a caste census which will be coupled with a financial and institutional survey across the country. Post this the leader remarked that a “historic assignment” to distribute the wealth of India will be taken up. This statement should be a cause of worry because it is not only a regressive public policy measure but will also discourage wealth generation in India, which will hinder our economic growth.While on one hand, global institutions and the Government of India are advocating for population control, concepts such as wealth redistribution based on population numbers will incentivise demographic inequalities between communities in India..A working paper from an independent body that gives economic advice to the Indian Government has recently published that between 1950 and 2015, Hindu population declined by 7.82% while the Muslim population increased by 43.15% at the same time. If we had to apply the concept of wealth redistribution, a portion of wealth that the government considers excessively possessed by certain social groups from the Hindu community will be redistributed to Muslim community who have significantly grown in numbers. Even wealth redistribution within Hindus would cause major social rifts between caste groups. This is as disingenuous as it is divisive in its intent. Irrespective of whether the political leader of the party that is advocating this idea is coming to power or not, the fact that a national party in India is proposing to implement such ideas should make us cautious. The disease of political populism coupled with the dangerous idea called wealth redistribution will heavily setback India’s economic growth. While it is true that economic inequality exists in India, the antidote to this problem is not discouragement of wealth generation through wealth redistribution.Instead, governments must try to actively level the field for production of wealth through providing basic amenities and market linkages. Ensuring the productivity of the labour force and promoting the entrepreneurial spirit of the citizens is the right way to go about this. In other circumstances, the government can actively promote livelihood generation through self-help groups, organising informal labour and creating allied sectors for established industries. These multi-pronged efforts will reduce the gap of economic inequality which will ultimately ensure that India stands First.

Wealth : Redistribution or Destruction?

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