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Several other studies also reflect similar findings of high income inequality in India, which has gone high in post economic liberalisation phase in 1990s. The idea of liberalisation was to initiate the role of market by ending India’s License Raj system, which can help India to become a competent player in global and open market system. Open market economy then brought a startling growth of about 8% percent for almost a decade in India. Such growth has brought in many changes in the country including successful creation of super-rich club of billionaires. The findings of Gandhi and Walton show that in mid-1990s, India began with two billionaires, worth a combined total of $3.2 billion, and by 2012 there were 46 billionaires with total net worth of $176.3 billion.[ii] The latest newspaper report says that the number of billionaires in India has nearly doubled in 2014 to 109 from 59 in 2013, with total net worth of $ 422 billion. The top 10 of them have wealth worth $ 138.04 billion. Mukesh Ambani is the richest person in India with wealth worth $ 26.89 billion. His wealth has increased by about 37% from last year. Gautam Adani, the 10th richest person in the raw, whose wealth has increased by about 152% from last year and worth $ 7.17 billion. The average age of Indian billionaire is 62, where six of them are below 40 years.[iii] The ratio of total billionaire wealth to gross domestic product (GDP) has grown from mere 1% in mid-1990s to 6.6% in 2006 to 9.9% in 2012.[iv] In 2014, the ratio between the billionaire wealth and the GDP has triggered up to 22%. Only the top ten billionaires share about 8.09% of India’s GDP. It is also interesting to see the regional concentration of these billionaires within India. Mumbai, the financial capital of the country shares 70 of them followed by Delhi, the administrative capital of India sharing 37, and Bangalore, the IT capital of India sharing 23 of them. It is primarily therefore a metropolitan club of billionaires in India monopolising the asset holding and economic power, which bound have a sharp reflection on inequality with rest of India. The NRIs from two nations UK and UAE have maximum contribution in this club with L. K. Mittal being the richest person from UK with wealth worth Rs 97 K crores.
On the brighter side, such statistics verify the fact
that India’s economy has become much vibrant in the liberalisation phase. The
rise of such rich class as argued by Gandhi and Walton is both due to business
dynamism and business oligarchy. Business dynamism through an active role of
corporate sector is significant in India’s economic success story. Thus IT,
software industry, biotech, pharmaceuticals, finance and banking, manufacturing
have contributed fairly in Indian economy. But India still has a high
oligarchic and undemocratic economic and business structure which results such
heavy concentration of wealth. Thus ‘rent-thick’ sectors like real estate,
infrastructure, construction, mining, telecom etc., still continue to be
dominated by India’s traditional merchant classes, Khatris and upper caste communities.[v] ‘Rent-thick’
sectors are those where returns often flow from monopolistic economic power by
holding scarce resources and deriving maximum profit. According to Crabtree,
about half of India’s billionaires acquired their wealth in such ‘rent-thick’
sectors.[vi]
It is alarming to see that only about few dozens of billionaires (109) in the land of magnanimous 1.25 billion population shares 22% of GDP, and economic rules of the game are still rigged in favour of those handful elites. Such concentration of wealth has been possible due to the functioning of an undemocratic and non-competitive market even in the economic liberalisation phase, which has not worked in favour of vulnerable and poorest section of the society. Fair competition therefore can be a panacea, which refers to a market situation in which each entrepreneur can have an independent bargaining power to achieve the business objectives. Competition according to a Government of India report bound to stimulate innovation and productivity, having optimum allocation of resources in the economy. It guarantees protection of consumer interests, reduces costs and improves quality. This can accelerate growth and development by preserving economic and political democracy.[vii] In practice Indian markets are highly discretionary and weak regulatory environment according to an Oxfam report has set the tune for anti-competitive business practices, and fails miserably to be inclusive in nature. Therefore to create a fair competition, equal opportunity has to be the central tenet, which alone can bring inclusive modern societies, and a socialist structure of the market.[viii] Fair competition can break India’s business oligarchy and economic enclavity, which in turn can provide space for other players to grow. Thus, there arises the need to have a proper regulatory environment which can ensure a healthy competition in the economy so that all business enterprises can grow, expand and stimulate economic development of a country. Competition policy under Competition Act 2002 of India is one such step which attempts to prohibit anti-competition agreements through Competition Commission of India. Well functioning of such policy can ensure competitive outcomes and can prevent concentration of wealth and economic power.
Notes
[i]‘Poor-rich gap growing in India, Asia
Pacific:UN-ESCAP, at
[ii] Aditi Gandhi and Michael Walton,
‘Where Do India’s Billionaires Get their Wealth?’, EPW, Vol XLVII, No 40, 2012
[iii]
Piyush Pandey, ‘Adani breaks into top 1- rich club as wealth jumps
152%’, TheTimes of India, September 17, 2014, New Delhi
[iv] Aditi Gandhi and Michael Walton,
‘Where Do India’s Billionaires Get their Wealth?’, EPW, Vol XLVII, No 40, 2012
[v] ibid
[vi] J. Crabtree, ‘India’s
Billionaires Club’, Financial Times, 16 November, 2012
[vii] ‘Competition Protection’, Report by Government of
India
at,
http://business.gov.in/growing_business/competition_pro.php
[viii] Working for the Few: Political
Capture and Economic Inequality’, 178
Oxfam Briefing paper, January 20, 2014
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