Friday, August 24, 2012

Whither from Here? The Widening Income Gap in Modern India


One of the first things that struck me when I first came back to Delhi this year was the sheer magnitude of construction that seemed to be taking place in and around Delhi. It wasn't that I hadn’t noticed construction before when I visited first in 2009, or last year. When I first came in 2009, Delhi was constructing the Delhi Metro, which was a massive undertaking. The Government of Delhi has been busy digging to make room for the metro underneath this vast city.

But the kind of construction I am talking about here is not infrastructure development – like roads and mass transit. Rather, the construction I am talking about is commercial and residential – namely, condos, high-rise office buildings, and of course, malls. Economists and policymakers alike agree that this kind of construction is great – it brings jobs, construction and people with disposable incomes to any neighborhood where it occurs. And this euphoria of development, and the celebration of consumption, seems to be in full swing in India’s urban landscape today. Friends and family here are quick to point out fancy cars, fancy homes and fancy clothes wherever they go. The spotting of Bentleys and Rolls Royce’s on Delhi’s streets has been the topic of many a conversation I have had.

Connaught Place, New Delhi is one of the richest shopping districts in the capital
But what distresses me, among many others, is that this awesome growth that India has witnessed, which many have deemed as India’s rise, has actually masked a much more insidious development in India today. Of course, I am speaking here of the fact that India is witnessing an unprecedented rise in income inequality today. In a new report in 2011, the OECD estimated that inequality in wage earnings had doubled in the last two decades in India. They found that the top 10% in India earned 12 times more than the bottom 10%. It is possible that this number may not sound very shocking. Consider then, the fact that a recent government report found that the bottom 10% of the country lived on between 16 – 24 rupees a day. This is less than 50 cents a day, lower even than the World Bank measure of absolute poverty. By contrast, the top 81,000 households in India are worth $1.2 trillion. India’s GDP is $1.8 trillion. India’s population is a little over 1.2 billion. In other words, about 0.03% of households in India own about 67% of its wealth.

Taj Hotel, Mumbai is one of the grandest and most expensive hotels in India. It was also the site of the infamous 2008 terrorist attacks in Mumbai
All these numbers aren’t meant just for the purpose of shock and awe. I present them here to give the readers (and myself, really) a clearer sense of the sharp socioeconomic distinctions widely evident in India’s cities today, especially metropolises like Delhi and Mumbai. After work, I have had occasions to go out for drinks or dinner, or perhaps catch a live show with family members, or friends that I have made in the course of my time here. The average bill for two people ranges from 1000 rupees for casual drinks to around 5000 when going out for dinner, which is about $20-100. And this is in regular, middle-of-the-pack restaurants in a country with the largest population of poor people in the world. Going any higher here is far beyond my capacity, and I count my earnings and debts in dollars.

People here have often pointed out with great pleasure the newest malls cropping up or the newest retail brands opening chains of stores all around town. They insist that whatever comforts one can buy in developed countries like the United States or EU countries are readily available in India today. I certainly do not doubt the accuracy of the claim. I do wonder, however, if they are aware how insulated India’s rich are becoming from the everyday realities of poverty and the need for frugality that characterize the lives of the vast majority of people living in this country. The flaunting of wealth and its various trappings in television, print media and Bollywood have had a distinct impact on the various sections of society that do not count themselves amongst the rich elite. Their kids demand things – from iPhones to lavish weddings, which are far beyond the reach of the average Indian. Having aspirations and hopes of a better future is certainly a good thing. It is,in fact, a cornerstone of capitalism. But having dreams which are unattainable for the vast majority that are openly celebrated by a small, elite minority can be a recipe for disaster.

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