Inequality in India may be growing on various fronts, but joint efforts of social entrepreneurs, changemakers and government are bearing fruits.
In the last two narratives, we touched upon the 4 key issues that fuel inequality in India:
- Unequal distribution of assets
- Lack of access to basic necessities
- High cost of professional training resulting in lack of job opportunities
- And Lack of sustainable livelihood
In my recent chat, Suvankar Mishra, Executive Director of eKutirSB, the first BCorp in India, reflected upon 2 important issues that are undoing all the efforts of maintaining a balanced sociocultural structure in our country.
Crony capitalism exists in an economy in which the success in business depends on the relationship between businessmen and government officials. Crony-capitalism is exhibited by favouritism. It is believed that crony-capitalism arises when friendship and family ties between businessmen and the government officials influences economy corrupting political ideals. – India Today
According to a report in India Today, India has been ranked at the 9th position in the index of crony-capitalism. India’s crony-sector wealth accounts for only 3.4 percent of the gross domestic product (GDP) as per the new study by The Economist. The report also says that the non-crony wealth amounts to only about 8.3 percent of the GDP. Russia tops this list with 18% of GDP amounting to crony wealth. Top ranking indicates that the country is engaged more in crony-capitalism.
How Does It Fuel Inequality?
In a lecture in 2014, Former RBI Governor, Raghuram Rajan lashed out at the elements of Crony Capitalism, holding them responsible for the lopsided so-called development in India. He said,
One of the greatest dangers to the growth of developing countries is the middle-income trap, where crony capitalism creates oligarchies that slow down growth. If the debate during the elections is any pointer, this is a very real concern of the public in India today. – Raghuram Rajan, Former RBI Governor
Referring to this, Suvankar opined,
“Till the time crony capitalism exists…where campaigns of political parties are funded by private parties that in turn convert to vested interests, after they have been elected and they both together are supposed to work as common citizens of the country, which clearly doesn’t seem to happen in reality, this inequality will exist.”
India has moved from being one of the top contributors to the world GDP (up to 25%) in the 1700s to being a third world country stricken with poverty, during the British colonial era and then leapfrogging as one of the fastest growing economies in the world, which is a startling achievement in itself.
Before we start breathing heaved breaths of pride, it is necessary to understand that this has not changed many things on the ground. GDP growth numbers maybe noteworthy but it is also a fact that we have struggled to move up the Human Development Index ladder. Our country is still one of the top ones to make it to the lists when it comes to corruption, poverty, hunger and misgovernance.
“Along with development at global level, internal housekeeping needs to be done at macro ecosystem level to arrest the effects of crony capitalism” – Suvankar Mishra
Lack Of Open Governance
The current government policies like equality for all, digital equality for all, access to basic necessities, stand up India policy, rural development schemes, etc are helping in controlling inequality. But there is a very thin blanket that is underpinning your freedom of speech, your freedom of expression and your freedom to live on the whole.
“When the government, chosen to represent the country and spread and promote equality, start turning into connoisseurs of violating the constitutional laws, then the fundamental right to equality goes out of the window.” – Suvankar Mishra
52.1% of the population do not have access to basic sanitation services. Rural electrification and development of rural communities still have gaping holes in them. 240 million Indians, still do not have access to electricity. In spite of evolving governance and freedom of speech, sociocultural inhibitions curtail development and freedom of expression at all levels.
At a primary level, crony capitalism and lack of open governance are the two pillars that do not allow equality of opportunities and benefits of economic growth to be distributed equitably. Financial inclusion, initiatives towards making basic necessities accessible and an honest government, can create substantial changes in bridging this gap of inequality.
“To avoid this trap, and to strengthen the independent democracy our leaders won for us sixty seven years ago, we have to improve public services, especially those targeted at the poor. A key mechanism to improve these services is through financial inclusion, which is going to be an important part of the government and the RBI’s plans in the coming years.” – Raghuram Rajan