What run-away food inflation is doing to inequality can be anybody’s guess
An Indian earning a monthly wage of Rs 25,000 is among the top 10 per cent of earners in the country. This is what the recently released State of Inequality in India report by the Institute for Competitiveness found, using available government data.
As if dissuaded from diving deeperinto inequality in India, the report cautioned: “If an amount like this comes in the top 10 percentile, then the bottom-most condition cannot be imagined.”
The Economic Advisory Council to the Prime Minister commissioned this study. This demonstrates the wide chasm between the top and bottom earners. And this is getting wider.
Incomes of the top 1 per cent earners grew 15 per cent during 2017-18 to 2019-2020 while that of the bottom 10 per cent declined 1 per cent — a “failure of the trickle-down approach to economic growth”, the report concluded.
If wealth does not trickle down, what happens to those at the bottom of the pyramid? Will they ever rise towards the top, or even aspire to reach the top 10 per cent bracket — attaining a monthly eaincome of Rs 25,000?
Last year, the World Inequality Report 2022 termed India as the most unequal country:
India stands out as a poor and very unequal country, with an affluent elite.
In a conversation with me last November, Lucas Chancel, the lead author of the World Inequality Report 2022, said over 50 per cent of India’s population are without any significant wealth at all. He put this at the core of a widening inequality in the country.
It’s like a billionaire’s children would inherit wealth that would be that critical capital to further pursue prosperity. For those who don’t own any wealth, their children would be without any inheritance thus stifling their progress.
“People accumulate wealth across generations through inheritance. It has a snowball effect. This is why the rich section’s wealth grows faster. But it also creates a gap between people,” he told me.
I have been tracking the life of 57-year-old Sukru Ojha, a resident of Koraput (one of India’s chronically poorest districts), Odisha. I met him way back in 1996 in Koraput while reporting a severe drought.
He is among the 50 per cent of Indians who don’t own any assets. He didn’t inherit anything from his parents. Arguably, he doesn’t even inherit the constitutional Right to Life. As a child he moved out of his village in the face of starvation. Somehow, in the district headquarters town, he got a few days of daily wage.
Since then, he has been surviving on that. His income in the last 25 years effectively remains zero. In a good month, he earns currently Rs 2,000. In the last two years of the pandemic, he has survived with just bare meals of rice and pickle.
Now he has been hit by the pandemic of food inflation. On May 19, I spoke to him. “I can’t buy even the rice that I would love to eat a day.” Doing an inflation-adjusted analysis of his life-time income, his income can be termed as “zero”; he doesn’t have any disposable income.
“How you see your future earning? Can you aspire to earn Rs 25,000/month?” He replied: “I can never imagine that amount. I don’t have any base for further earning. My capital of labour is diminishing as I am aging.”
Last year when I spoke to him, he cited the pandemic and the lockdowns pushing him further into the poverty abyss. “Can’t express,” he told me.
The food inflation rate has more than doubled in the last one year. A recent World Bank estimate shows that one percentage increase in the food price will push 10 million people into extreme poverty. And, these are the people who are at the bottom of the income pyramid. This means they would never be able to bridge the income gap because of the severe unfavourable situations they are growing with.
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