OXFAM REPORT AND MY COMMENTS

 

OXFAM Report and My Comments

Oxfam India is a movement of people working to end discrimination and create a free and just society. Amitabh Behar is the CEO. A summary of the report along with my comments is given in succeeding paragraphs.

Major Findings for World

  • Inequality kills at least 21,000 people each day.
  • The pandemic has set gender parity back from 99 years to 135 years.
  • Women collectively lost over Rs 59 lac crore in earnings in 2020, with 1.3 crore fewer women employed than in 2019.

 Findings for India

Major Points

  • From Mar 20 to Nov 21, wealth of the rich increased from 23.14 lac crore to 53.16 lac crore.
  • Over 4.6 crore Indians fell into extreme poverty in 2020 (nearly half of the global new poor as per UN report).
  • The stark wealth inequality in India is a result of an economic system rigged in favour of the super-rich over the poor and marginalized.

Analysis of Indian Economy

  • Government revenue depends largely upon indirect taxes-63.9%-especially sale & manufacture of goods & services used by the common man. There was a decline in the proportion of corporate tax in the last 4 years.
  • The additional tax imposed on fuel has risen 33 percent in the first six months of 2020-21 as compared to the last year and is 79 percent more than the pre-Covid levels.
  • Wealth tax for the super-rich was abolished in 2016.
  • Corporate tax reduction from 30% to 22% caused a loss of Rs 1.5 lac crore to India and increased the fiscal deficit.

Poor State of Healthcare, Education & Public Services

  • Allocation towards health saw a decline in 21-22 of 10% from the previous year.
  • Health spending has remained very low at 1.2 to 1.6% of GDP over the last 22 years.
  • Education expenditure has remained at 3% of GDP over the last 18 years.
  • Expenditure on social security schemes is poor at 0.6% of the total expenditure in 21-22, a decline from 1.5% in the previous year.
  • With 93% of the workforce in the informal sector, little has been done to bring to them benefits like paid leave, health insurance, maternity leave and pension.

Privatization of Education Increases Inequality

  • Modi’s policy of increasing privatization of education has increased inequality. The policy disproportionately affects the country’s poor and marginalized people, particularly girls.
  •  In a 2021 survey by Oxfam India, 52 percent of the parents who send their children to private schools reported having to pay hiked fees for the year 2021-22.
  • 35 percent of children were prevented from accessing education due to non-payment of fees.
  • 38 percent of parents had to pay illegal charges as capitation fees at the time of admission.
  • 57 percent of parents had to pay additional charges that were not part of the declared official break-up of fees.
  • Parents spend a substantial part of their household income (15 percent and above) on private school fees.

Privatization of Healthcare Increases Inequality

  • The high cost of private healthcare continues to affect marginalized communities especially due to its high costs and further widens inequalities.
  • Out-of-Pocket Expenditure (OOPE) in private hospitals is almost six times of that in public hospitals for inpatient care, and two or three times higher for outpatient care. The average OOPE in India is at 62.67 percent while the global average is at 18.12 percent.

Recommendations of Oxfam India

 Recognize inequality is real and agree to measure it. India needs to track policy impact better by improving mechanisms for its measurement. There is an immediate requirement to start disaggregating more public statistics by income and introduce regular collection of data on income and wealth inequality, while ensuring that this data is made freely available in the public domain. At least two surveys should be conducted over a ten-year period, using a reasonably comparable methodology capturing income and wealth inequalities.

 Redistribute India’s Wealth

It is time for India to reintroduce a wealth tax to generate much-needed resources to fund the recovery from the pandemic. Tax compliance by wealthy individuals must also be drastically improved, instead of imposing indirect taxes on India’s poor and middle class. Evidence shows that the threat of an audit shows the most pronounced effect on compliance and can be complemented by shaming tax evaders or by the imposition of penalties and should take precedence over a reduction in direct tax rates which has ambiguous effects on compliance and adverse effects on revenue.

 Generate Revenue to Invest in Education and Health

 A temporary ONE percent surcharge on the richest 10 percent population could help raise an additional Rs 8.7 lac crore, which could be utilized to increase the education and health budget. The primary outcome of the pandemic must be a quality, publicly funded and publicly delivered healthcare system that works for all and not just the rich. A secondary outcome should be an education system which addresses the needs of everyone, not just those privileged to attend elite private schools or have access to digital technology. There is also an urgent need to improve medical infrastructure by implementing India’s patent rights charter (PRC), standardizing diagnostic procedures, building rural clinics, and developing streamlined health IT systems in tandem with adopting a family-health approach, making greater investments in healthcare and training and paying frontline healthcare workers adequately.

 Enact and Enforce Statutory Social Security Provisions for Informal Sector

 Government needs to focus on laying the legal groundwork of basic social sector protections for 93 percent of India’s workforce.

 Change Rules to Improve Society

 It is time to reverse social and economic policies that have contributed to the poor development outcomes for India’s marginalized communities. It is time to reverse privatization and commercialization of public services, address jobless growth and bring back stronger social protection measures for India’s informal sector workers.

Development Schemes which Can be Funded with Wealth Tax on Rich (Part of Report)

  • Four percent of tax on wealth on the 98 billionaires can take care of the Mid-Day- Meal program of the country for 17 years or “Samagra Shikshya Abhiyan” for 6 years.
  • One percent wealth tax on 98 richest billionaire families would finance Ayushman Bharat for more than seven years.
  • One percent of tax on wealth of the 98 billionaires in India can take care of the total expenditure for school education and literacy.
  • Four percent tax on wealth on the 98 billionaires would be enough to fund the Mission POSHAN 2.0 (includes Anganwadi Services, POSHAN Abhiyan, Scheme for Adolescent Girls, and National Creche Scheme) for 10 years
  • India’s 2021 budget allocation for the Ministry of Women and Child Development is less than half of the total accumulated wealth of the bottom ten of India’s billionaire list. Just a 2 percent tax on individuals with an income of over 10 crores could increase the Ministry’s budget by an astounding 121 percent.
  • If the wealth of the first hundred billionaires is accumulated, they could fund the National Rural Livelihood Mission scheme, responsible for creating Self Help Groups for women, for the next 365 years.

My Comments

  • The recommendations are apparently very attractive to implement.
  • It clearly shows the flawed tax policies and privatization policies of Modi which have increased inequality. The free ration being given to the 80-crore people to compensate for the bad policies was not a great solution.
  • The rich should be encouraged to voluntarily fund inequality reducing schemes, education and healthcare, rather than force them through legislation, because if that is done then they may easily run abroad and invest abroad.

–BY COL M M NEHRU

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