How Inequality Increased Greatly in Covid Times | Bharat Dogra & Kumar Gautam

by Bharat Dogra & Kumar Gautam

In the initial days of Covid-19 pandemic, it was widely believed that this will have an equal impact on all sections of people, but it soon became evident, particularly after the introduction of lockdowns, that the pandemic is likely to have a much more serious impact on poorer and weaker sections of societies across the globe. As Antonio Guterres, the United Nations Secretary General said:

“The COVID-19 pandemic has played an important role in highlighting growing inequalities. It exposed the myth that everyone is in the same boat. While we are all floating on the same sea, it’s clear that some are in superyachts, while others are clinging to the drifting debris.”

Recently, on January 25, Oxfam issued a report titled The InequalityVirus and its Indian Supplement drawing attention to various aspects of this troubling phenomenon of already high inequalities accentuating further in Covid times.

This report has pointed out that the global billionaires’ wealth rose by 19 percent during this time. The world’s 500 richest people gained USD809 billion in 2020 recording a 14 percent increase since January 2020 while 100 million people were pushed into poverty.

Drawing on a vast range of studies and surveys the Oxfam report points out that in India the wealth of Indian billionaires increased by 35 percent during the lockdown and by 90 percent since 2009 to USD 422.9 billion ranking India sixth in the world after US, China, Germany, Russia and France.This is despite the fact that most of India suffered huge loss of livelihoods and its economy has dipped into recession for the first time after a quarter of a century.As per International Labour Organization (ILO), with a share of almost 90 per cent of people working in the informal economy, about 40 Crore workers in the informal economy are at risk of falling deeper into poverty during the crisis.

The Oxfam points out that the increase in wealth of the top 11 billionaires during the pandemic can easily sustain the MGNREGS scheme or the health ministry of India for the coming 10 years.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.

A survey done by Credit Vidya reported that the loss of income among those earning more than INR 60,000 a month was 10 percent compared to their pre-pandemic income whereas the income of those earning less than INR 20,000 a month reduced to 37 percent of their pre-pandemic income.

Eighty-four percent of the households suffered a loss in income in April 2020. 170,000 people lost their jobs every hour in the month of April 2020. Approximately 167 people killed themselves due to starvation and financial distress from job loss and reduction in income between March to July 2020.

Keeping in view the huge distress associated with increasing inequalities, the Oxfam Report recommends that reduction of inequalities should get top priority in the days to come. Indexing of various indicators should be prioritized and monitored with the aim of taking urgent steps to prevent any increase of inequality. This should be done not only at union and state level but even at district level where people including workers, peasants and women can be involved more closely in this.

Fiscal policies also need to play a more important role in reducing inequalities. In this context special mention can be made of the recommendations as part of a policy paper titled ‘Fiscal Options & Response to Covid-19 Epidemic (FORCE)’, which the IRS Association presented to the Prime Minister’s Office (PMO) also suggested raising the income tax rate to 40 percent for those who earn over INR 1 crore per year, re-introducing wealth tax and effecting a one-time Covid-19 cess of 4 per cent on taxable income of over INR 10 lakh to help the economy recover from the lockdown. Imposing such taxes would reduce reliance on regressive taxes on consumption which hurt the poor and marginalized disproportionately.

(Bharat Dogra is a veteran journalist and author. Kumar Gautam teaches Economics at The Lawrence School, Sanawar.)