The dynamics of inequality

Occupational and geographic mobility across the region are bridging income and consumption-related disparities, says the World Bank report, ‘Addressing Inequality in South Asia’. The findings accordingly underscore the role of urbanisation and private sector participation as being critical to mitigating socio-economic disadvantages. Inequality should be understood in terms of monetary and non-monetary dimensions of well-being, contends the report. The share of the poorest 40 per cent of households in total consumption shows that inequality in South Asia is moderate by international standards. The comparison is valid even though estimates elsewhere are based on income per capita. Significantly, but not surprisingly, economic mobility of the recent decades has proved beneficial to the population at large, cutting across traditional divides and challenging stereotypes. This finding, if anything, underscores the positive effects of legal safeguards for the protection of minorities. Indeed, monetary inequality of enormous significance is manifested in India’s highly disproportionate billionaire wealth, amounting to 12 per cent of gross domestic product in 2012. The ratio is considerably large even compared with other countries at a similar level of economic development, says the report.

Conversely, non-monetary indices of well-being pertain to opportunities available to people in the early years, outcomes during adulthood and support systems through the life-cycle. Thus, although it is not the poorest region, South Asia accounts for some of the worst human development outcomes in basic education and health care. Besides the highest rates of infant and child mortality that prevail in many parts of the region, more than 50 per cent of poor children below five years of age in Bangladesh and Nepal are stunted; the proportion for India is over 60 per cent. Pervasive tax avoidance and regressive fuel and electricity subsidies are primarily responsible for the inadequate provisioning of public services. Of no insignificant value is the non-dogmatic stance the report adopts on a fundamental moral question such as inequality. Drawing upon influential academic debates in economics and philosophy, the study argues that the rewards linked to hard work and entrepreneurship serve as incentives to give one’s best and enhance overall well-being. It would be fair to infer that non-monetary inequalities are arbitrary and potentially more detrimental to economic growth over the long term. To bring such ideas into the public and political mainstream would enhance the quality of the debate, and further consolidate contemporary competitive electoral democracies.