The booming Bombay stock market in 2007 and the benefits of globalization have seen India's billionaires list swell to 40 on the Forbes Billionaires List. The Indian billionaires combined wealth has more than doubled from $170 billion to $351 billion in 2007. While Bill Gates has slipped to number three spot from number one, the number 4, 5, 6 and 8 spots in the top 10 are now occupied by Lakshmi Mittal, Mukesh Ambani, Anil Ambani and KP Singh from India.
The news of the newly-minted Indian billionaires is bringing sharper focus on the growing rich-poor gap in India. The Times of India reports Communist Party leader Sitaram Yechury claiming that on the one hand, 36 Indian billionaires constituted 25% of India’s GDP while on the other, 70% of Indians had to do with Rs 20 a day. "A farmer commits suicide every 30 minutes. The gap between the two Indias is widening," he said.
The growing wealth gap is also a big concern in other BRIC countries such as China and Russia. Fully a third of the new billionaires come from Russia (35), China (28) and India (19). The Chinese government is trying to tackle the growing rich-poor, urban-rural divide, a major cause of the rise in incidents of social unrest and violence in the world's most populous nation. The estimates of the urban-rural income gap vary by anywhere from 3 times to six times.
It is not unusual to see the rich-poor gap in the early stages of explosive growth in economies where the focus is on wealth creation rather than distribution. However, if this continues for an extended period of time, there is significant potential for widespread social unrest and serious political insatiability that can threaten the very foundations of a nation. From the recent speeches by the political leadership in India and China, it is clear that there is an acknowledgment of the issues and willingness to work on more equitable distribution of the fruits of progress.
Click here for complete list of Forbes Billionaire.
Here's a video clip of Prof Jayati Ghosh of Nehru University talking about growing rich-poor gap in India:
More people in India, the world’s second most crowded country, have access to a mobile telephone than to a toilet, according to a set of recommendations released today by United Nations University (UNU) on how to cut the number of people with inadequate sanitation.
ReplyDelete“It is a tragic irony to think that in India, a country now wealthy enough that roughly half of the people own phones, about half cannot afford the basic necessity and dignity of a toilet,” said Zafar Adeel, Director of United Nations University's Institute for Water, Environment and Health (IWEH), and chair of UN-Water, a coordinating body for water-related work at 27 UN agencies and their partners.
India has some 545 million cell phones, enough to serve about 45 per cent of the population, but only about 366 million people or 31 per cent of the population had access to improved sanitation in 2008.
The recommendations released today are meant to accelerate the pace towards reaching the Millennium Development Goal (MDG) on halving the proportion of people without access to safe water and basic sanitation.
If current global trends continue, the World Health Organization (WHO) and the United Nations Children’s Fund (UNICEF) predict there will be a shortfall of 1 billion persons from that sanitation goal by the target date of 2015.
“Anyone who shirks the topic as repugnant, minimizes it as undignified, or considers unworthy those in need should let others take over for the sake of 1.5 million children and countless others killed each year by contaminated water and unhealthy sanitation,” said Mr. Adeel.
Included in the nine recommendations are the suggestions to adjust the MDG target from a 50 per cent improvement by 2015 to 100 per cent coverage by 2025; and to reassign official development assistance equal to 0.002 per cent of gross domestic product (GDP) to sanitation.
The UNU report cites a rough cost of $300 to build a toilet, including labour, materials and advice.
“The world can expect, however, a return of between $3 and $34 for every dollar spent on sanitation, realized through reduced poverty and health costs and higher productivity – an economic and humanitarian opportunity of historic proportions,” added Mr. Adeel.
http://www.un.org/apps/news/story.asp?NewsID=34369&Cr=mdg&Cr1#
http://finalizations.com/sewage-water-pollution-and-its-environmental-effects.html
Here are some excepts of Nehru University's Prof Jayanti Ghosh's video interview on Real News Network in which she says there is "no Indian miracle":
ReplyDeleteJAY: So in India you're saying there never was major reforms and it's getting worse.
GHOSH: Absolutely. If you look at the pattern of Indian growth, it's really more like a Latin American story. We are now this big success story of globalization, but it's a peculiar success story, because it's really one which has been dependent on foreign—you know, we don't run trade surpluses. We don't even run current account surpluses, even though a lot of our workers go abroad to Saudi Arabia and the Gulf, to California, as IT workers. We still don't really run current account surpluses. So we've been getting capital inflow because we are discovered as this hot destination. You know, we are on Euromoney covers. We are seen as this place to go. Some of our top businessmen are the richest men in the world. They hit the Fortune top-ten index. All of that kind of thing. This capital inflow comes in, it makes our stock market rise, it allows for new urban services to develop, and it generates this feel-good segment of the Indian economy. Banks have been lending more to this upper group, the top 10 percent of the population, let's say. It's a small part of the population, but it's a lot of people, it's about 110 million people, which is a pretty large market for most places. So that has fuelled this growth, because otherwise you cannot explain how we've had 8 to 10 percent growth now for a decade. Real wages are falling, nutrition indicators are down there with sub-Saharan Africa, a whole range of basic human development is still abysmal, and per capita incomes in the countryside are not growing at all.
JAY: So I guess part of that's part of the secret of what's happening in India is that the middle, upper-middle class, in proportion to the population of India, is relatively small, but it's still so big compared to most other countries—you were saying 100, 150 million people living in this, benefiting from the expansion. And it's a lot bigger. It's like—what is it? Ten, fifteen Canadas. So it's a very vibrant market. But you're saying most of the people in India aren't seeing the benefits.
GHOSH: Well, in fact it's worse than that. It's not just that they're not seeing the benefits. It's not that they're excluded from this. They are part of this process. They are integrated into the process. And, in fact, this is a growth process that relies on keeping their incomes lower, in fact, in terms of extracting more surplus from them. Let me just give you a few examples. You know, everybody talks about the software industry and how competitive we are. And it's true. It's this shiny, modern sector, you know, a bit like California in the middle of sub-Saharan Africa. But when you look at it, it's not just that our software engineers achieve, it's that the entire supporting establishment is very cheap. The whole system which allows them to be more competitive is one where you are relying on very low-paid assistants, drivers, cooks, cleaners. You know, the whole support establishment is below subsistence wage, practically, and it's that which effectively subsidizes this very modern industry.
Shining India is made up of a few fabulously rich individuals like Mukesh Ambani whose new billion dollar 27-story home soars into the Mumbai skies. It's a brand new symbol of the vast rich-poor gap that continues to grow in India.
ReplyDeleteHere's what NY Times says:
Now Mukesh is moving into a tower that makes Sea Wind seem like a guest house.
“It’s kind of returning with a vengeance to where they made it into the middle class and trumping everybody,” said Hamish McDonald, who chronicled the family’s history in his new book, “Mahabharata in Polyester: The Making of the World’s Richest Brothers and Their Feud.”
“He’s sort of saying, ‘I’m rich and I don’t care what you think,’ ” Mr. McDonald said.
Mumbai, once known as Bombay, is India’s most cosmopolitan city, with a metropolitan area of roughly 20 million people. Migrants have poured into the city during the past decade, drawn by Mumbai’s reputation as India’s “city of dreams,” where anyone can become rich. But it is also a city infamous for its poor: a recent study found that roughly 62 percent of the population lived in slums, including one of Asia’s biggest, Dharavi, which houses more than one million people.
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Along Altamount Road, which is also home to other industrialists, the reaction to the new neighbor is mixed. Some senior citizens along the street worry about the noise from the comings and goings of helicopters. But Utsav Unadkat and Harsh Daga, college students who grew up in the neighborhood, stared up at the tower on a recent afternoon as if it were a dream realized.
“I heard he has a BMW service station inside,” said Mr. Unadkat, dragging on a cigarette (unconfirmed). “There’s also a room where you can create artificial weather,” Mr. Daga added (apparently true).
Standing nearby, Laxmi Kant Pujari, 26, a decorator’s assistant, waited to carry glass samples into the building. If his samples are selected, Mr. Pujari, a migrant, would handle the installation — a task he considered an honor. “Whether it is a beggar or an Ambani, the desire to be rich is in everyone’s heart,” he said.
Farther down the street, Sushala Pawar admitted struggling to comprehend the difference in Mr. Ambani’s life and her own. She cooks for a family in a nearby apartment, earning 4,000 rupees a month, or about $90. She sleeps on the floor of the hallway after the family has gone to bed.
“I’m a human being,” she said. “And Mukesh Ambani is a human being. Sometimes I feel bad that I live on 4,000 rupees and Mukesh Ambani lives there.”
But then, nodding toward the building, she perked up.
“Maybe,” she said, “I could get a job there.”
There is essentially no disagreement on the fact that India has significantly more hunger and poverty than Pakistan because of serious inequities in Indian society and economy. MPI and IFPRI data clearly show this fact over a period of several years.
ReplyDeleteAnd the reason for inequities appears to be the income and productivity of 70% of Indians who work in agriculture and textiles and make only two-thirds of their Pakistani counterparts as I have shown through data. This does not compensate for the fact that the 30% of Indians who work in manufacturing and service sectors have higher productivity. It just widens the rich-poor gap in India.
The situation in China is very different in terms of their farm productivity and incomes and China's huge emphasis on rural development which is lacking in South Asia.
Almost all of the income growth in India has been in manufacturing and services sectors. The rest of 70% Indians work force (vs 54% of Pakistanis) work in agriculture and textile where the Indians productivity is only two-thirds of their counterparts in Pakistan.
Here are the figures:
Country....Agri(emp/GDP)..Textiles..Other Mfg..Service(incl IT)
India........60%/16% ...........10%/4%.....7%/25%...........23%/55%
Pakistan......42%/20%...........12%/8%......8%/18%...........38%/54%
India vs. Pakistan: Per Capita GDP $3,125 PPP ($1,083 nom) vs. $2,570 ($955 nom)
Agriculture: $833 PPP ($288 nom) vs. $1,225 PPP ($454 nom)
Textiles: $1,242 ($433) vs. $1,714 ($636)
Non-Textile Mfg: $11,155 ($3,870) vs $5,785 ($2,142)
Services $7,246 ($2,590) vs $3,654 ($1356)
Data shows that the majority of Indians who work in agriculture and textiles are on average 50% poorer than their Pakistani counterparts, as also reflected in the under-$2 a day per capita income figures for 60% of Pakistanis and 76% of Indians.
It also shows that Indians in manufacturing and services sectors add almost twice as much value as Pakistanis, and produce significantly higher value goods and services than their Pakistani counterparts.
The income range in India is much wider from $883 to $11,155 accounting for the much bigger rich-poor gap relative to Pakistan's relatively narrower range from $1225 to $5,785.
The challenge for India is to improve its farmers' productivity and move some of them into higher value added sectors of the economy.
The challenge for Pakistan is to have its manufacturing and services sectors produce more goods and services of higher value, and continue to migrate more of its farmers into other sectors of the economy.
It's clear that farming and textiles continue to be the most important economic sectors with the biggest impact on the lives of the majority of ordinary citizens of India and Pakistan. And just as the US and EU look after their farmers, it is very important for South Asian governments to protect their farming and textile sectors even as they promote diversification of their economies.
Here are some excerpts from a Vanity Fair article by Nobel Laureate Economist Joe Stiglitz about growing concentration of wealth and power in America. It's titled "Of the 1%, For the 1%, By the 1%":
ReplyDeleteAmericans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.
It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.
Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
Here's Times of India on philanthropist Dominique Lapierre citicism of India's rich:
ReplyDeleteKOLKATA: Celebrated author Dominique Lapierre is upset and frustrated by affluent Indians' "reluctance to help the underprivileged in this country". He has been funding projects for the needy in West Bengal for nearly three decades, emphasizing on deprived and inaccessible areas in the Sunderbans.
The City of Joy Aid, Lapierre's non-profit organization, has funded and operated a network of health clinics, hospitals, rehab centres, boat hospital and schools for the poor since 1981. He has contributed extensively through royalties generated from his international bestsellers, lecture fees and donations from readers.
In the city to celebrate his 80th birthday, he said it's quite sad that neither Indians nor their government have done enough for the poor and downtrodden. "India is shining but a part of it is still lying in darkness. I request every Indian to come forward and do something for their very own people so that they, too, enjoy a better life," he said.
The Padma Bhushan recipient and his wife visited Goramari Island in Bengal's South 24-Parganas district with 40 international donors and friends who contribute to his charities and other humanitarian work in India. Lapierre was concerned by the plight of poor children who, he said, are yet to get a proper livelihood despite money flowing in for nearly three decades. "I am surprised that India's rich and famous have been ignoring the reality of this country," he said.
Lapierre has been a major benefactor of Southern Health Improvement Samity (SHIS) for over 30 years. "It is an absolute delight to have Dominique Lapierre among us. We are extremely grateful to him and his eminent compatriots from Western Europe who come and visit us every year, without fail," said SHIS president Sabitri Pal.
http://timesofindia.indiatimes.com/city/kolkata-/Indias-rich-not-doing-enough-for-the-poor-Lapierre/articleshow/11025282.cms