Chowpatty Beach, Mumbai. Photo courtesy: Shreyans Bhansali/Flickr

“Chile was the birthplace of neoliberalism, and it shall also be its grave!” said Gabriel Boric, a young student leader from the radical fold who was forged in the protests that has rocked Chile in recent years. The Chileans just elected him as their president in what was the most acrimonious and polarised election in decades. It was a contest between the legacies of the left-liberal Salvador Allende and that of General Pinnochet who ousted Allende through a US backed military coup in 1973. Garnering more votes than any Chilean president in history, Boric has defeated his far right opponent Jose Antonio Kast.

Now, why do we need to know of this development in the farthest corner of the earth 17,000 kilometers away? Why be bothered? What binds our fates, and those of millions across the world, is the wreck that decades of neoliberal policies has created for the people under its grip. We have a shared tragedy.

Neoliberal has spawned inequality from the Andes to the Ganges

Even as Chile registered higher GDP figures, emerged as the strongest economy in Latin America and thrived as the “golden boy” of market economy allowing for rampant privatization, it also simultaneously turned out to be one of the most unequal countries. The mounting gap between an “economic elite living according to wealthy North American standards on the one hand, and a very poor working class and increasingly pauperized middle class on the other” has in recent years triggered massive social unrest that rocked the country. People had been reeling under the brunt of high costs of part-privatized education and health systems, rents and utilities, and a hugely unpopular privatized pension system and the waves of unrest in the last two years took the lid off. The recent elections were more like a referendum on the brazenly market fundamentalist approach that had fed the grotesque inequality.

The recently released World Inequality Database reveals that the top 10% in Chile earn almost 30 times more than the bottom 50%. The bottom 50% in Chile earn only 10% of total income, while the top 10% share is equal to almost 60%. The wealth inequality is far more sharp. As per the Inequality database, the average wealth for the bottom 50% in Chile is negative, with a high number of Chileans in the clutches of mounting debt as they try to stay afloat in the midst of rising prices of public utilities. This, while the top 10% and top 1% of the population respectively hold 80% and 50% of the total!

This beyond doubt has been the direct fallout of neoliberal policies allowing for the rich to prosper at the cost of the poor. The Inequality database in fact estimates that in the last 25 years, the gap has widened alarmingly. “Between 1995 and today, the average wealth of the bottom 50% has remained around zero. Simultaneously, the shares of the top 10% and top 1% have more than doubled.”

The trajectory has been eerily similar in India after 30 years of liberalization

In India, income inequality was abysmally wide under the British rule with a top 10% having an income share of around 50%. Policy makers were aware of this gaping inequality and sought to address it through a somewhat socialist-inspired development trajectory. Abolition of landlordism, nationalization of the banks, public services and key sectors – were all intended to promote a more equitable framework under the five-year plans. While inequality remained very much a reality, such moves at least contributed to reducing the income share of the top 10% to about 35-40% till the adoption of the neoliberal trajectory reversed this trend and majorly contributed in widening the gap.

Professor Chirashree Dasgupta, for instance, points towards the fact that while in 1969 out of total value created, 65% went towards wages and 35% towards surplus. Since the 1990s this has almost reversed. While 35-40% today goes to wages, 60-65% goes towards surplus. The Gini coefficient figure (that measures inequality) for India increased to 35.7 percent in 2011 and to 47.9 per cent in 2018 ranking India second only to Russia in the trend towards inequality.

The recently released World Inequality Database gives alarming figures. It estimates the average national income of the Indian adult population to be 2,04,200 rupees. While the bottom 50% in India earns 53,610 rupees, the top 10% earns more than 20 times (1,166,520 rupees). Much like Chile, the adoption of the neoliberal path meant the slow withdrawal of the state from its redistributive and regulatory role. The result has been astounding in terms of the income gap this has fostered. While the top 10% and top 1% hold respectively 57% and 22% of total national income, the bottom 50% share has gone down to 13%.

The figures for wealth inequality are starker. As per the estimates of the inequality database, the average household wealth in India is equal to 9,83,010 rupees but that would be a most misleading figure unless one goes beyond the average. The bottom 50%, much like in Chile, own almost nothing, with an average wealth of 66,280 rupees (i.e., 6% of the total). The middle class is also relatively poor with an average wealth of only 7,23,930 rupees (i.e., 29.5% of the total). The top 10% own 65% and the top 1% own 33% of the total wealth. In the analysis of the World Inequality Lab, India stands out as a “poor and very unequal country, with an affluent elite”, a phenomenon that has only been exacerbated in the course of the pandemic which in common parlance was thought to have had an equalizing effect.

A viral bias in inequality

Given that crores already lived on the edge, the shock of the pandemic and the subsequent mindless lockdown gave a death blow. In April 2020 itself 84% of the households suffered loss in income and 170,000 people lost their jobs every hour in the same month. Coming on the heels of the double whammy of demonetization and GST, the lockdown pushed 23 crore Indians below the national minimum wage threshold. But while we were kept distracted by the bogey of “Corona Jihad” and the “Bollywood drug racket”, the wealth of Indian billionaires increased by 35 percent during the lockdown and by 90 percent since 2009. It is to be noted that Mukesh Ambani was making 90 crore per hour during the pandemic when around 24% of the people in the country were earning less than 3,000 rupees per month. It is grotesque to even imagine that it would take an unskilled worker 10,000 years to make what Ambani made in an hour during the pandemic and 3 years to make what Ambani made in a second as estimated by an Oxfam report titled ‘The Inequality Virus’. So while India boasts to be the only country to register a double digit growth in 2021, researchers estimated (using the Rangarajan committee’s estimates of the poverty line) that 15-20 crore additional people will slip into poverty by the end of this year.

  • India’s 100 billionaires have seen their fortunes increase by 12,97,822 crore rupees between March and December 2020, enough to give every one of the 138 million poorest Indian people a cheque for India-Rupees 94,045 each.
  • The increase in the wealth of the richest person in India during pandemic could keep 40 crore informal workers out of poverty for at least 5 months.
  • The increase in wealth of even the top 11 billionaires during the pandemic can easily sustain the MGNREGA scheme or the health ministry of India for the coming 10 years.

Peeling the layers of inequality in India

While these aggregate figures are extremely telling and alarming, it would be worthwhile to present the above figures in reference to some of the other data points that bring to fore the many layers of exclusion that need to be factored in to get a better and more nuanced understanding of what inequality means in India. While global comparisons (like with Chile) are useful, but much of the nuances tend to get lost in aggregate comparisons, nuances that we can’t lose sight of given that historic marginalization of particular social groups lay some more exposed than the other to the viral bias.

In a society that has practiced the inhuman norm of caste based social distancing for centuries, the impact of the pandemic cannot be oblivious of its caste bias. For instance, even if we look at the basic prescriptions of home quarantine, hygiene and social distancing prescriptions, we must realise that they don’t apply similarly to all as is evident in the study by Sandip Mondal and Ranjan Karmakar. Illustratively, 71.85% SC households cannot afford soap for washing hands after defecation, 33.94% cannot afford the same before meals. Ashwini Deshpande and Rajesh Ramachandran in their study found the same pattern in terms of job and income loss. Although all caste groups faced job losses due to lockdown, the rate of job losses among SCs was three times higher than the upper castes.

Similarly, a study by Amitav Kundu indicated that the hateful targeting (as “super-spreader”) and social vulnerabilities of the Muslims made them stand out as one of the worst sufferers of the pandemic. In rural areas, for instance, the percentage of persons with no work among the self-employed for the SC/ST population, Muslims and others (non-SC/ST and non-Muslim) shot up from 6.9%, 8.6% and 5.5%, respectively, to 15.1%, 27.5% and 13.7%, respectively. It is evident that the impact was sharpest for Muslims, followed by the SC/STs.

The impact of the first wave was rather gendered and in this respect too the pandemic was anything but an equaliser. The analysis in the State of Work in India Report shows that conditional to being in the labour force in pre-pandemic times, women were 7 times more likely to lose their job during the pandemic and were 11 times more likely to not return to work. And even when they return to work, they do so with lesser earnings.

What these means is that while for the others, the resumption of normalcy may to at least to some extent signal recovery, but for the ones in the margins, the disruptions have had impact on their life choices. Some may have had to exhaust their hard earned savings while others may have had to discontinue education. Forced choices that would have long term implications in deepening inequality.

Do we have any lessons to learn from Chile?

Unless we diagnose a problem correctly, our prescriptions often tends to be a dose of the same medicine that created the problem in the first place. The people of Chile seem to have identified neoliberalism to be the bane and have opted for a change of course. They have voted for the promises of higher social spending, redistribution of wealth through wealth tax, an inclusive state policy. They have voted to push the breaks on a system that normalized having two kinds of public parks in Santiago – for the rich and the poor. But at a time when clearly there are also two Indias in more ways than one, we seem to be doing quite the opposite. Our government is trying to find neoliberal fixes for problems of its own making and we are cheering them along at times in the name of jingoist pride, at other times for majoritarian sentiments.

From giving massive tax breaks to the corporates to rolling back on environmental safeguards; from refusing to increase public spending even in the face of dwindling demand to doing quite the opposite by handing over public assets to private hands – the government seems to be in a headlong rush towards oligarchic control over the economy at the cost of the people’s interest.

The 953 Indian families that feature in the Hurun Rich List constitute just 0.0004% of all households in India. And the total wealth of this tiny group works out to around Rs 50.3 lakh crore which is almost a quarter of our GDP. It is for us to realize that the wider the gap between this tiny group the rest, the louder will be decibels in the newsrooms, the taller will be the iron statues, the grander will be the mahals & mandirs and the bloodier will be the hateful bigotry – all intended to cover up this stark inequality that stares at us.

The playbook was not so different in Chile either. Kast, the right wing candidate defended free markets, championed “traditional values”, vouched for a “monocultural Chile of European descent” and was vitriolic against migrants or the “others”. But the people decided not to be fooled yet again. It is up to us to decide whether we want to be the cheerleaders of hateful ignorance, or be wakeful.

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