How inveigling economic recovery amid the Covid-19 pandemic might appear doesn’t tell the whole story. Income inequalities have existed in emerging economies over decades, but the revelation of the disparities between the rich and the poor has left us staggered. It’s crystal clear that the dire straits of the pandemic have affected the per capita income of the lower segments of the economy substantially.
The rich incorporates a vast proportion of wealth in India and is highly subjective to the uneven growth development process in India’s economic segment. Over the past years, Prime Minister has tried to bridge the gap by announcing schemes beneficial for uplifting the living standards of the underprivileged. The consensus has been ill-planned and lackluster, hence resulting in higher variances in per capita income.
Despite the disruptions of the Covid-19 pandemic, India’s sizable whacking has got afflicted through liquidity in the domestic channels and overriding reliance on foreign funds inflows for fulfilling the expenditure requirements. It has augmented the erosion of an unequal economic recovery, sharpening the inequalities.
What’s the prologue behind the extreme disparities in income levels?
Developing nations like India have often instilled a presumption that when the inequalities commence soaring higher, beyond it, income levels are destined to rise exponentially. Though the controversial synopsis might have its merits, the grappling scenario of Covid-19 has indicated a lack of fiscal imagination by the government. It does not reflect on an unsullied strategy of economic recovery, which would help mitigate the consequences of the catastrophe. Well, it would be viable to give a real insight story on the topic.
While the nation has been wavering from the historic misery, Mercedes-Benz AZ unveiled and introduced its Maybach sports vehicle utility. The astonishing factor in the pop-up of its vertical in India, the German automakers’ luxury got lapped up within a month. It has sparked heavy speculation on how these rich conglomerates devise such exceptional sales amidst the humanitarian crisis keeping the poor in its grip.
How were the rich able to splurge such extravagant money across amidst the lower-income households exhausting every single penny in strive to survive. The state of affairs prevalent in India showcases a scornful polarity- fleet-flooded sale of luxurious cars and soaring net worth of billionaires superseding the agony of the troublesome citizens. It has caused severe damage to the poor as they keep suffering tormenting scenarios.
According to the economists, poor households got depleted of nutrition due to income barriers, and the scenario could deteriorate even further if the states do not induce a resolution package.
Will the PM’s Extended Nutrition Recuperation favor the striking households?
Frequently, we have noted Prime Minister Narendra Modi has failed to deliver on his promises. However, recently he declared a nutrition stimulation extended till November to provide a fixed amount of food grains to around 800 million people. Additional staple dispensation was inevitable in meeting the necessities last year, but the absence of income overhauled the situation. The cumulative expenditure on eggs, meat, and fruit slashed drastically, hence incapable of providing healthy nutrition.
The affluence of the rich continued while the poor got deprived and pressurized under the nutrition crisis. The repercussions of income inequality got reflected in the mismanagement of the policymakers. Crucial reverberations could get induced to avoid another year of nutrition crisis by providing the poor households with sustenance income.
The proposals determined by economists at the Azim Premji University need to get consolidated into the system, let’s say accumulating Rs 150 a day for the poor households. The second wave impact has knuckled down the incomes massively, and these cash transfers would be of some help, perhaps still not enough.
Is the government the sole culprit of the pandemic inequality? What does it mend for the economic recovery?
The government’s inclination towards spiraling borrowing costs, its regressive tax-based consumption on products like petrol and life-saving Covid-19 drugs have worsened the woes of the middle-class and the poor households. India’s scenario is grim and abysmal as its per capita income downgraded to Bangladesh’s net income, boiling tensions across the Centre. Excess liquidity engrossed by cheap money from the Reserve Bank of India has reflected on escalated asset prices, resulting in building a grandiosity amid the despair of millions.
India’s monetary policy has established a robust economic flow from small and medium entrepreneurs to large cooperations. It has helped in boosting their valuations and deprived the middle-class by exacerbating their needs. The prowess of wealth creation has got disseminated to enhancing the investment potential of luxurious brands.
India’s colossal businessman Gautam Adani has upheaved its net income during the Covid-19 pandemic, seized his spot behind Mukesh Ambani. A stooping $43 million surge in net income this year has flung the business tycoon from Modi’s home ascendancy. Moreover, it wasn’t the only instance of the rich getting affluent amid the crisis. Investors propelled the markets as Radhakishan Damani procured a $137 million mansion in Mumbai, the priciest property dealing in the nation.
Large Corporations Surpassing High-Income Levels While Industries Collapsing Under Pressure
Over the year, the mid-sized and the small industries have prone to the brink of collapse as they stumble with sub-optimal 62 percent capacity utilization. Astonishingly, the other five large-scale producers have soared their market share from 5 percent to 58 percent. Crisil, an affiliate of S&P Global Inc, claimed that the onus of the blockbuster profits laid down by catapult action in private hands.
Argument: Where Does the Government’s Priority Sides Momentarily?
When the government closes its annual reports next fiscal year, it will project a budget deficit exceeding $206 billion. The reinstating of spiking infections in April and May would likely enhance the numbers, as in pristine circumstances, the shortfall would have accounted for 6.8 percent of GDP. If this holds to be true, the economic recovery will be stagnant. Hence, intensifying the troubles of growth and stipulation, as always, the ultimate bearers of the pandemic would be the poor, and the effect on these corporate houses will be negligible.
The government’s cumulation of taxes will be far lesser than the estimates as the economic growth prospects shrink in the upcoming months. It would mean a sizable proportion of wealth is home to private cooperates. The argument popping up is that will any fiscal or monetary policy be strict enough ever to bridge the gap of income inequality? The stakes are dwindling momentarily.