By Tanvi Goenka
The first thing I saw when I stepped out from the airport in Bangalore was a huge, red billboard screaming “STAPLES”. As I progressed towards my house I was confronted with several new construction sites, malls, shops, theatres and flyovers. I was thinking “Wow! The city has definitely progressed a whole lot in the last few months. That’s amazing!”In almost every newspaper in India one would come across the phrase “India Rising” somewhere within its pages. It makes you think though, all this growth that is occurring in the economy… is their a flip side? Does this boom have repercussions that don’t necessarily catch the eye as obviously as the Staples billboard?
Growth in the economy does not necessarily entail benefits for the majority of the population. More than 60% of India’s labor force is employed in the agricultural sector. Yet this sector accounts for only 16.6% of the GDP and is struggling to keep up with its growth target of 3%, whereas the service sector with merely 28% of the workforce accounts for 55% of GDP.
The Gini coefficient which measures inequality has seen a steady rise over the last 10 years. It measures income inequality in a country on a scale from 0 to 100, where 0 is perfect equality. In the last then years the Gini coefficient for India has increased by 15% in urban cities from 39 to 43. At the same time, GDP per capita which measures the growth in an economy has increased from $1800 to $3700 from 1999 to 2007. It is not only the gap between the rich and the poor that has increased but also regional disparities have grown. While the urban population accounts for only 6.5% of the country’s population, it earns 13.2% of its income.
In recent times, India’s Sensex has not only crossed the 20,000 mark but has also tripled in value over the last 3 years, Mukesh Ambani’s worth is nearing $50 billion, there are 70,000 millionaires in the country and the GDP recently crossed the $1 trillion mark. I could potentially go on and on about the feats India has achieved. In the same country however, about 80% of the population today earns under $2 a day and 24% of the population lives below the World Bank’s poverty line.
There is a very famous theory in supply side economics known as the trickle down effect. This theory explains how if the wealth of the elite increases the benefit will also trickle down to the lower levels in society. This phenomenon however doesn’t seem to be taking place in India. Perhaps everyone in the country is becoming richer. It however is quite apparent that the rich are getting richer at a much faster rate than the poor. Is this really fair? Doesn’t everyone deserve an equal chance at this 9% growth?