Checking income inequality key to fighting poverty in India: Report

 Ninety million Indians could be lifted out of extreme poverty by 2019 if only the country manages to prevent a rise in income inequality, according to a report by an international development organisation.

PTI| Updated: Oct 31, 2014, 22:11 PM IST

New Delhi: Ninety million Indians could be lifted out of extreme poverty by 2019 if only the country manages to prevent a rise in income inequality, according to a report by an international development organisation.

The gap in income shared between the richest 10 per cent and poorest 40 per cent of the population in India has been on a constant increase from 1995 and the benefits of growth have increasingly accrued to the richest members of society, pushing income inequality ever higher, according to the report released by Oxfam here today.

The report, 'Even it Up: Time to End Extreme Inequality', is based on research by Oxfam into the increasing gap globally between the rich and the poor. According to the report, India could end extreme poverty for 90 million people by 2019 if income inequality was reduced.

Blaming 'poverty wages' for accelerating economic inequality, the report said that the richest people have high and rapidly rising salaries and bonuses whereas the poor suffer the indignity of poverty wages. It found evidence of poverty wages and insecure jobs in middle-income India as also in countries like Vietnam and Kenya.

Talking about the "billionaire boom", Oxfam says that in early 2014, the 85 richest individuals in the world had as much wealth as the poorest half of the global population.

The billionaire boom is not just a rich country story. Highlighting the boom in India, the report said, "The number of India's billionaires increased from just two in the 1990s to 65 in early 2014. And, today there are 16 billionaires in sub-Saharan Africa, alongside the 358 million people living in extreme poverty."

The report stressed on tax reforms and the need for sharing the tax burden fairly.

It suggested steps such as increasing the national tax to GDP ratio and shifting the tax burden from labour and consumption to capital and wealth to level the playing field.

"This is an easy win for the government. By levying a wealth tax of only 1.5 per cent on the 65 super rich, 90 million people can lead a life of dignity which is free of poverty," said Nisha Agrawal, CEO, Oxfam India.

The Oxfam report further says, "Despite the evidence that it increases inequality, rich-country governments and donor agencies, such as the UK, the USA and World Bank, are pushing for greater private sector involvement in service delivery.

"The private sector is out of reach and irrelevant to the poorest people and can also undermine wealthy people's support for public services by creating a two-tier system in which they can opt out of public services and therefore are reluctant to fund these through taxation."

It batted for free public services such as health and education and schemes like universal child benefits, old-age pension and unemployment protection to help tackle inequality.

Urging the government to reject market fundamentalism and oppose the special interests of the powerful elite, the report suggested that workers should be paid a living wage while the gap with "skyrocketing executive reward" should be closed.