Wealth Gap in India has Created a Social Time Bomb

Newsweek yesterday wrote “In recent years, the global media has been abuzz with glowing headlines about India’s economic leaps and bounds, the emergence of its consumerist middle class, and its status as one of the last frontiers for luxury conglomerates looking to consolidate their recent gains. But, as the ongoing terrorist assault on Mumbai indicates, maintaining its recent momentum will be a delicate task, and one that it cannot accomplish without bringing all of its citizens on board, including, most importantly, its disaffected Muslim underclass., a large Muslim minority of approximately 150 million.”

India is one of the most wealth-unequal nations in the world, due to the triumph of economic neo-liberalism, which began in the early 1990s, which was eagerly embraced by the richest families in India.  Everyone knows there is a wealth gap in India, but the degree of inequality is stunning.

India has developed incredible wealth for a tiny minority. India’s economy, Asia’s 3rd largest, has grown at 9% per year for past 4 years. The top 10 percent of India’s population owns between 33 to 50 percent of the country’s wealth, Some 1.8 million households earning $100,000 or more a year, spend a tenth of that on luxury goods. [1]

The concentration of wealth among super-rich is particularly striking. Mumbai alone has more billionaires than all of Scandinavia, but half the 13 million population lives in slums. [2]

India has 53 billionaires in a population of 1 billion (5 millionths of a percent), and their wealth is equivalent to 31% of India’s GDP. India ranks 4th in world in number of billionaires, after US, Russia, and Germany, but India’s billionaires richer than Russia’s or Germany’s. India is ahead of Japan, China, UK, France, for example. [3] Luxury malls with gold-plated ceilings are proliferating across India., right next to slums. [4]

The vast majority of people in India now live in incredible poverty. 80% of India’s population earn about $5 per week, and live on 50 US cents per day. [5] In 2007, India was 94th out of 118 nations in the Global Hunger Index, below Ethiopia, for example. [6] As India’s neoliberalism developed full force in the late 1990s, India, Pakistan, and Bangladesh had half the world’s hungry people, yet together they had 50 million tons of surplus grain. [7] One fifth of the world’s 500,000 women who died in childbirth in 2007 were from India. [8]

In the UN’s Human Development Index, (a composite of life expectancy, literacy, educational attainment, and GDP per capita), India scores 128 in world, behind desperately poor, ravaged areas with no wealth such as Nicaragua, El Salvador, Honduras, Botswana, and even the occupied areas of Palestine. [9]

The situation for farmers in India, 60% of the population, is so desperate that between 1997-2007, according to government figures,166,000 Indian farmers killed themselves. From 2001 to 2006, Indian farmers killed themselves at the rate of one every half-hour. [10]

International corporate takeover of seed, pesticide, and fertilizer markets since 1991 have raised cultivation costs from $50 per acre to $300 per acre. Farmers growing food cannot afford to plant enough to feed themselves, so they have to buy grain, whose prices have skyrocketed. 60% of outlays in farm households, averaging $12 per person, goes for food. [11]

Farmers are particularly desperate in areas that followed IMF directives to abandon food crops and plant cash crops. For example, India is the world’s second biggest producer of cotton. US subsidies to US cotton-farming corporations exceed the value of the cotton itself, so cheap US cotton imports have flooded India and driven income to India’s cotton farmers down 70%., while cultivation cost have increased six-fold since 1991. Farmer suicides in cotton-growing areas occur once every six hours. [12]

Indian farmers are unable to get $100 loans for seed or fertilizer because of 14% interest rates, while in the cities, middle-class professionals are approached by banks to borrow tens of thousands at 4% interest to buy Mercedes cars. [13]

Finally, Government investment in agricultural development, like irrigation, decreased from 14% of GDP in 1991, to 6% in 2005. [14]

Muslims in India have an average literacy rate just higher than low-cast Hindus. Muslims are 13% of population but less than 5% of government posts, and only 4% of university undergraduates. Muslim poverty rate in urban areas is 38%, higher than low-cast Hindus. [15]

As Newsweek concludes, if there is a quantum of solace to be extracted from this tragedy, it’s that it serves as an urgent call to address the underlying causes of terrorism, the most pressing issue of our time, with a targeted effort to counteract the destabilizing effects of poverty, lack of basic education, health care and civil rights. [16] We have a simpler way of saying it: “No Justice, No Peace!”


2 Responses to “Wealth Gap in India has Created a Social Time Bomb”

  1. 1 gargpk November 30, 2008 at 6:22 am

    Very illuminating post. It is true that income disparities are continuously increasing amongst various social groups in India. This is the root cause of much of the social tensions and conflicts here. To treat these as law and order problems is useless.

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