Page 12 - Issue 01

needed to improve growth, equity including jobs. Some of the economic reforms announced may help in
reviving growth in the next few years by raising investment, reducing the twin balance sheet problem of
banks with NPAs and debt problem for the corporate sector, increasing credit flow, solving supply side
problems and improving exports. However, we discuss here on the policies needed for reducing
inequalities as we are having ‘K’ shaped recovery.

Covid-19 in the last one year has once again reminded us the growing inequalities in India. A recent Pew
Research Report shows that India’s middle class may have shrunk by a third due to the pandemic while the
number of poor people earning less than Rs.150 per day more than doubled. The Pew report also warned
that the situation may actually be worse than estimated because of worsening inequalities.

Inequalities were increasing earlier also but the pandemic has widened them further. For example, the

share of wages declined as compared to that of profits. The big companies and large part of the corporate
sector could manage the pandemic. The quarterly net profit of the BSE200 companies reached a record high
of Rs.1.67 trillion in the third quarter of FY21 and was up by 57% year-on-year. But, the informal sector and
workers have suffered a lot with loss of incomes and employment in the last one year. In other words, the
recovery is more k-shaped with rising inequalities.

Development can’t be discussed without talking about inequality. In the past several philosophers,
economists and other social scientists have discussed about inequality. In recent years. Rising income and
wealth inequality attracted the attention of IMF, World Bank, OECD and Davos meetings. With the release
of the book by French economist Thomas Piketty in 2014, there has been more debate on inequality in
several parts of the world. First time at global level, a goal on inequality is included in sustainable
Development Goals (SDGs). Goal 10 of SDGs is about reduction in inequality within and among countries.
There are two main arguments for reduction in inequality. One is ethical or philosophical argument that

equity is important for its own sake (intrinsic value). Second one is reduction in inequality is required for
sustainability of growth (instrumental value). Therefore, there is a need for addressing inequality for
sustainable growth and well-being.

As the British economist Anthony Atkinson says
“much is written about the 1 per cent and the 99
per cent. But, if we are serious about reducing
income inequality, what can be done? Reduction in
inequalities is important for its own sake and for
improving demand which can raise private
investment, consumption and exports for higher

and sustainable economic growth.

SEE BLOG
We concentrate here on three-pronged approach
for reducing inequalities. These are: (a) focus on
employment and wages, (b) raising human
development and (c) Quasi universal basic income

and other social safety nets.

First, creation of quality or productive
employment is central to the inclusive growth

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