India Has A Massive Inequality Problem And It Isn’t Doing Enough To Fix It

New Oxfam report ranks India near the bottom of the global heap



India ranks 132nd out of 152 countries on a new index that measures the commitment by a country towards reducing inequality, the advocacy group Oxfam said on Monday. Sweden, Belgium, Denmark, Norway and Germany topped the rankings.

The index, created by Development Finance International and Oxfam, measured government action on social spending, taxes and labour rights because “strong positive progressive actions by governments in these three areas have played a key part in reducing the gap between rich and poor”. The index is composed of 21 data points with varying weights; these include spending on health and education, share of tax revenue in the GDP, share of tax exemptions, minimum wage and maternity benefits.

India ranks 149th out of 152 countries on social spending, 91st on progressive taxation and 86th on labour rights. “Government spending on health, education and social protection is woefully low,” the report says of India. “The tax structure looks reasonably progressive on paper, but in practice much of the progressive tax is not collected. On labour rights and respect for women in the workplace, India also fares poorly, reflecting that the majority of the labour force is employed in the agricultural and informal sectors, which lack union organization.”

“Restrictive labor market policies (example hiring and firing by a firm that employs more than 100 workers) are one of the factors that have prevented the labor intensive manufacturing sector to grow to scale in India, Nisha Agrawal, Oxfam CEO said. “In India, we are not creating many formal sector jobs and most workers in the informal sector have low productivity, low wages and low social security and legal protection,” she said.

The report also finds systematic discrimination against women in India’s labour force. “During the last 10 years, the labor force participation rate of Indian women, already very low compared to other Asian countries, has fallen from 37 to 27 percent. As we prosper, we are becoming more controlling and stopping women from stepping out to earn their own incomes. India is one of the few countries in the world where there is a break in a woman’s career when she gets married unlike in other parts of the world where women withdraw for brief periods during childbirth,” Agrawal said. “In the corporate sector, many listed companies seem to find it hard to hire even one competent woman for their board, a mandatory under the Companies Act…While the bulk of farming work is done by women, they own only about 10-15% of the land that they farm… It is this systematic discrimination against women and girls that is both a cause and a result of the inequality that drives poverty,” she said.

While Nepal ranks 81st and Maldives 91st, other south Asian countries fare worse than India; Sri Lanka, Pakistan and Bangladesh rank 138th, 139th and 141st while Bhutan ranks in the bottom 10 at 143rd. South Africa does better than the United States; 21st to the US’s 23rd. China ranks 87th.

In general, developing countries spend more of their budgets on education than richer ones do, but less on health. They may also have more progressive taxes, but collect them less efficiently. Finally, richer countries do better on labour and gender rights.