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Source: The post is based on an article “Tackle the four trojan horses of inequality” published in The Times of India on 26th August 2022.
Syllabus: GS 3 Inclusive Growth
Relevance: Growing Inequalities in India
News: Persisting and increasing inequalities have been a defining feature of present times. Policymakers should focus on at least four factors that are increasing inequalities.
What are the factors that are increasing inequalities?
(1) Economic system itself: French economist Thomas Piketty in his seminal work “Capital in the Twenty-First Century” postulated that inequalities are here to stay as they are hardwired into the present system. The rich have the capital, returns of which are much greater than those that are possible from labour.
(2) The rich are becoming richer due to the macroeconomic situation worldwide: In early 2020, major central banks adopted expansionary monetary policies due to slowing economies. This led to a large inflow of capital which resulted in asset price inflation, enriching those who had assets. At the same time, the pandemic-induced disruption, and supply chain disruption led to decade-high levels of inflation which disproportionately squeezed consumption by the poor.
(3) The growing education chasm: In addition, the edtech revolution in the education sector has profound implications for inequalities in access to and quality of education. While edtech has huge potential to improve access to quality education, it has not helped the poor and people in rural areas.
(4) The vanishing jobs pie: The employment elasticity of growth has come down and the number of gig-economy workers with no social protection has been going up. The Pandemic induced lockdown impacted lower-skilled workers, predominantly in the informal sector, as well as increased gender-based inequities in income and employment.
(5) Digital boost but only for the well-off: India’s innovations in information and communication technology (ICT) have been remarkable. But the is a large digital divide and some are getting left behind like people relying on manual labour such as guards, messengers and construction workers. This gap has been further widened by the pandemic.
