Why in the News? 

Congress Party released its Election Manifesto ’Nyay Patra’, the word ‘redistribution’ has dominated the election discourse.

Context

 The World Inequality database found that in 2022-23, 22.6% of the national income went to the top 1%, the highest ever since 1922. Wealth inequality is even more stark with the top 1% population having 40.1% share in wealth. It is clear that inequality can no longer be ignored and justified as a collateral to growth. The cost of such unequal growth must be interrogated.

Arguments against the redistribution of wealth:

• Against the fair mean: Wealth redistribution stems from a ‘zero-sum’ thought to reduce economic disparity. However, this approach conflates the process of acquiring wealth with the outcome, potentially penalizing even those who acquired their wealth through fair means.
• Hindrance to Economic Growth: Implementing confrontational policies to make the rich poorer can hinder investments and trigger capital flight, which is essential for economic growth. Economic growth is necessary for increasing the overall economic pie and improving prosperity for all.

Measures needed to reduce Inequality:

• Fixing Systemic issues: Wealth and inheritance taxes are seen as potentially punitive measures that may not effectively address economic inequality. The government needs to focus on fixing systemic issues rather than penalizing the wealthy.
• Prioritizing investment:-  Economic growth is emphasized as crucial for addressing inequality. Policies should prioritize investment and avoid hindrances that might deter capital flow.
• Job Creation and Labour intensive jobs : Jobless growth and imbalance in capital-labour relations contribute to inequality. Labor market-focused policy incentives, such as employment-linked schemes and promoting labor-intensive activities, are proposed to rebalance this skew.
• Overhauling of taxation structure: The taxation system is criticized for burdening the poor and middle class disproportionately compared to corporations. There’s a call for an overhaul of the taxation structure to ensure fairness and simplicity, with a focus on lowering the tax burden for the common person.
• Social Welfare Programs: Social welfare programs are deemed essential to provide a safety net for the poor until they can benefit from economic growth. Funding for such programs can come from a combination of faster growth, efficient tax collection, and welfare delivery mechanisms.

Steps taken by the Government:

1. For addressing Social Inequality

• Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) and Deendayal Antyodaya Yojana- National Urban Livelihoods Mission (DAY-NULM): These schemes aim to create additional employment opportunities in both rural and urban areas.
• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): This scheme provides a legal guarantee for 100 days of employment per year to rural households.
• Pradhan Mantri Awas Yojana: This scheme provides affordable housing to the urban and rural poor

2. For improving Financial Inclusion

• Atal Pension Yojana: This pension scheme targets the unorganized sector and private sector employees without pension benefits
• Pradhan Mantri Jan Dhan Yojana: This scheme aims to provide universal access to banking facilities for all households

3. For enhancing Access to Basic Necessities

• Pradhan Mantri Ujjwala Yojana: This scheme provides LPG connections to women from Below Poverty Line (BPL) households
• Swachh Bharat Mission: This program focuses on providing toilets for every household and cleaning India’s cities and villages

Conclusion: By embracing and implementing inclusive policies that tackle the underlying causes of inequality, India has the potential to transition towards a more equitable society. This transformative approach aligns with the aspirations of the United Nations' Sustainable Development Goal 10.