India's Gilded Age - Prosperity and Disparity
On 6 August, 2018, Asia Society India Centre hosted James Crabtree, Amish Tripathi, Shubhada Rao, Ashutosh Varshney, and Niranjan Rajadhyaksha for a panel discussion that was centred around Mr Crabtree’s new book, ‘The Billionaire Raj’. The panel, moderated by Mr Rajadhyaksha, discussed the new era of billionaires in India against the backdrop of rising income inequality and uneven wealth distribution.
James began by saying that the world needed to play close attention to India, more than it already does, because the success of India, and its transition to a democratic market economy, is of crucial importance. The tensions of India’s development story have to be understood, and we must step back and take a look at the issues affecting us. He highlighted three fault lines, critical to future development, that India is dealing with right now- inequality and the rise of the super rich, crony capitalism, and the ‘boom-and-bust’ investment model. He supplemented Ashutosh’s comparison of India today with the USA’s Gilded Age, saying that India’s advantage is that it is starting last, and that it could learn from the past.
In the same vein, Ashutosh said that the Gilded Age was a metaphor for the politics and economics of that period in USA’s history. There was glitter on the surface, with an immoral, corrupt core, not very different from the India we know. The idea of the Gilded Age was remarkable transformation, accompanied by corruption and a government-business nexus.
Amish said that he didn’t see too much of a cause to worry about the future. He drew parallels between the years that preceded the USA’s Gilded Age and the years before India’s 1991 reforms, which were much worse compared the years that succeeded it. In the context of the 1991, liberalisation and privatisation reforms in India, he said that while inequality increased, absolute poverty dramatically decreased. Criticising India’s culture of complacency, he said that we had to continue to make reforms, realise our state capacity, and be supportive of economic growth without ignoring inequality.
Shubhada called India a society of inclusive inequality, stating that along with the reduction of poverty, the middle class has risen, and has not remained stagnant. Equality comes from growth and development, and some tools that fiscal policy should enable include a progressive taxation system, reevaluating whether we can implement Universal Basic Income, and investing in healthcare and education.
When Niranjan asked the panellists what policy change they would like to see taking place, Ashutosh said that he didn’t see an alternative other than investing in road and human infrastructure, progressive taxation, and giving entrepreneurs creative freedom.
Amish was in concurrence, and added that the biggest reform we need to bring about is the enforcement of a strong justice system, followed by ensuring minimum governance.
Shubhada highlighted the need for a strong rule based system to ensure steady growth and not go ‘boom and bust’, along with bringing transparency and accountability to the system.
James concluded by saying that at some point, whether by the next general election, or the one after that, India would become the most expensive democracy in the world, and that focusing on building and enhancing state capacity is the way to go forward.
As reported by Aditi Mukund, Programme Intern at Asia Society India centre.