Do you have any idea how much an average Indian farmer earns? Or what an average Indian earns? Okay let us divide the economy of India into major sectors- Agriculture, Industry and Services. If we divide our $3.2 trillion nominal GDP ($11.2 trillion by Purchasing Power Parity) in these segments we will find Agriculture contributes about 15%. It is okay – even agriculture contributes only 1% of US GDP. But in India this sector employs 50% of the adult workforce. Just to reiterate- half of the India’s families are dependent on agriculture but they have only 15% share in the country’s annual income.
1950 to the second decade of 21st Century – One Sector has always been failing
Now coming to the question, how much exactly an average farmer earns? It is approximately ₹100,000/annually per household. Considering an average family has 5 people it is ₹20,000 per person and it only converts to less than a couple thousand rupees per month per person.
Maybe a brief idea about the growth rate of different Indian sectors might help us understand the vulnerable state of this agriculture sector. The agriculture sector which employs nearly 50% of Indian population grew at less than 2% whereas the Services sector grew at about 10% to make the aggregate to grow at 6-7% for the last 2 decades.
So fundamentally we will have to understand when we say a nation is growing at a certain rate, how uniform is that growth, who all are contributing to the growth, who are the outliers and who are out of the race? The GDP per capita (Nominal or PPP) can yet not define the real central tendency being highly influenced by the outliers. The median income level can somewhat account for the overall development along with certain other parameters including Mass Literacy or Infant Mortality Rate (basic hospital infrastructure and ordinary citizen’s access to the same).
Talking about the outliers –the promoters of Nifty 50 and top companies in the countries. But isn’t it obvious that they should have majority wealth to say- they only provide majority of jobs in the country and serve as real assets to the country? Isn’t it same for almost all rich to poor countries? The simple answer is “Yes”. But there’s a very big ‘but’. Is this at all a healthy growth? In capitalism it is. I mean how can Mukesh Ambani help own approximately 50% of RIL from the very start and RIL is today valued at $200b not by him but by the people of the world. The same goes for Jeff Bezos or Bill Gates – it’s the people of the world who value the businesses at more than $1.5 trillion.
But if the top billionaires literally add hundreds of billions of dollars to their total wealth in this horrible performing year of 2020 as Bernie Sanders complain about, what exactly does this mean? We are moving towards more financial extremism. If in 2010 someone said the total wealth of top 10 billionaires is equivalent to the bottom half of world population wealth; in 2030 it can a single person! Or even another way of thinking it – if Amazon’s annual median pay ($29,000) is equivalent to its CEO’s 9 seconds worth of income by 2030 it could actually be a second or two!
Source: Fast Company
Ensuring uniformity of growth is no one’s responsibility and when you have the large tech giants as publicly listed companies wherein no in is stopping a poor person to buy into their portfolio, why is it even a concern? Why and how should the government interfere? No one literally stopped a poor farmer to invest in Reliance Industries IPO on BSE and grow at almost the same rate as Ambani. It is he – who chose to invest in this own farming business and obviously lost to the growth race to the billionaires. In all fairness many of these self-made billionaires have created such a humongous wealth they themselves never could’ve imagined in making so!
But is there actually any way that can help to keep a balance? Maybe a wealth tax for inheritance? Of course, many of these billionaires do pledge to give away a part of their wealth in charity and involve in several philanthropic activities like Facebook founder and CEO Zuckerberg pledging to give away 99% of his wealth or Bill Gates over a period of his life (Bill and Melinda Gates foundation) has given away $100b+. In Indian context we have Wipro’s Azim Premji, the MP Birla foundation, Tatas, Ambanis and Adanis amongst many others. The biggest concern in this context is absorption of the wealth in the society and if that one-time transfer can be capitalized to make a full-time employment opportunity.
The Philanthropy that matters
The only thing in this context is connection. A big business in any country not only provides job opportunities for thousands but enable thousands of other businesses to thrive amongst others. Think about an IT corridor- OMR in Chennai. Is it only the IT employees that benefit? What about the hundreds of snacks shop, hundreds of PGs, the huge demand in the local transportation, poll tax by government – and the list goes on and on. To see closely it is only a few tech giants indirectly employing so many. But what if a group of people is repeatedly cut off from this growth trajectory through generations? This is very important for us to understand – even if I agree a very small snacks shop is a beneficiary of TCS (his small shop beside the office); not everyone is having the opportunity to make that small shop also. If anyway the small businesses can somehow connect with the giant conglomerates it’ll be a great thing – but somehow a very good proportion of people stay out of the race permanently and neither is there any opportunity to connect in foreseeable future.
There is nothing wrong in capitalism if that capitalism can influence and benefit a good proportion of people in a particular geography. If it cannot do so – it will account for growth in GDP figures but that’s not “development”. And that “Increasing Mismatch” can be fixed with sustainable development and not only growth – not to mention growth is a huge component in the developmental process!
From Debjit Pal : Editor – TAPMI Journal of Economics and Finance