If a new Oxfam report is any indication, the meek have already been disinherited in this world.About 700,00,000 people own half of the world’s wealth, according to Oxfam. That means 1 percent of the world’s population controls $110 trillion in wealth which is 65 times the total wealth of 3.5 billion people.
The key findings in the Oxfam report titled ‘Working for the few: Political capture and economic inequality’ come to coincide with the annual World Economic Forum in Davos where some of those very rich people get together and wonder about such issues.
The Oxfam findings are:
• Almost half of the world’s wealth is now owned by just one percent of the population.
• The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
• The bottom half of the world’s population owns the same as the richest 85 people in the world.
• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
• In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.
The report also has a brief mention of India that says:
“India has seen its number of billionaires increase from less than 6 to 61 in the past decade, concentrating approximately $250bn among a few dozen people in a country of 1.2 billion. What is striking is the share of the country’s wealth held by this elite minority, which has skyrocketed from 1.8 percent in 2003 to 26 percent in 2008, though it declined in the aftermath of the global financial crisis.
By some estimates, half of India’s billionaires acquired their wealth in ‘rent thick’ sectors.31 This means sectors where profits are dependent on access to scarce resources, made available exclusively through government permissions and therefore susceptible to corruption by powerful actors – as opposed to creation of wealth. Such sectors include real estate, construction, mining, and telecommunications. In fact, it is common knowledge that property development is India’s most opaque business, where enormous sums of illegal money exchange hands and little tax is collected.32 Wealth accrued from rents is made possible by the coaction of government and powerful groups, whereby the economic rules of the game are rigged in favor of elites.
Despite incredible economic gains by a few dozen people in India, poverty and inequality remain rampant. While the number of billionaires has multiplied by ten, government spending on the needs of the poorest and most vulnerable groups in society remains remarkably low. For example, India’s public spending on healthcare is just one percent of GDP.33 The Asian Development Bank’s recently released (assessing country expenditure on poor and economically vulnerable groups) ranked India 23 out of 35 countries in the region. Even among the 19 low- to middle-income countries, India ranked in the bottom half, in twelfth place.
Corruption and loopholes mean that tax revenues necessary to address inequality are either too low or misappropriated. The fortunes amassed by India’s new billionaires are often hidden through shell companies established in foreign countries, making it easy to evade taxes. A recent working paper by Oxfam India demonstrates that ending the inheritance tax (in 1985) and limiting the wealth tax (in 1993) to non-productive assets (thereby excluding financial assets) has driven a low tax-to-GDP ratio and is permitting the much greater concentration of wealth. The tax structure in India is also highly regressive, with only 37.7 percent of total taxes coming from direct taxation such as income, profits, and capital gains.”