Budget 2019: In 1987, the wealth team of Forbes magazine undertook a project that was soon going to become a famous list published annually. This was the year when the magazine published its first World’s Billionaires List. Reporters from the magazine travelled around the world and discovered 140 people who were dollar billionaires of that time. In this list, there was one entry from India- Birla family who were into textiles, aluminium and autos. Recently released report on wealth inequality by Oxfam – a confederation of independent organizations focused on alleviation of global poverty says that in 2018 there were 119 such people and in one year alone India added 18 dollar billionaires.

On 24th July 1991, Manmohan Singh gave his famous budget speech and proposed to open India’s economy for foreign investors. These reforms encouraged the private sector and reduced government’s control over the market. Oxfam report points that today top 1% population holds 51.43% of the national wealth while the bottom 60% own merely 4.8%. These numbers point that the benefits of the booming economy were cornered by a fraction of India’s population. The report also says that in 2018, wealth of the top 1% population increased by 39% whereas wealth of the bottom 50% increased by Just 3%. Again pointing that the policies of successive governments are actually working for the elite class and income inequality is increasing over the years.

So what went wrong with the liberalisation? In his book ‘The Globalisation of Poverty and the New World Order,’ Canadian economist Michel Chossudovsky has studied the impact of IMF induced structural reforms (economic liberalizations) on many countries including India.

Chossudovsky argues that the reforms directly affected the livelihood of several million people. He further says that the New Economic Policy introduced under IMF’s ‘economic surgery’ required the government to cut spending in social programs and infrastructure, eliminate state subsidies and price support programs and sell of public enterprises to large business houses and foreign investors. Because of these reforms, millions of people working in textile and automobile and engineering industries lost their jobs. In organized sector labour laws were made less stringent and trade unions became weaker. Work was subcontracted to small factories in the unorganised sector that employed cheaper labour with little or no job security. The industries that were affected by this policy were shoe manufacturing, jute, small engineering and garment industries.

Instead of creating decent jobs the immediate impact of liberalisation was a loss of decent employment. International Labour Organisation (ILO) defines decent employment as salaried jobs where a worker’s salary is not dependent on the earnings of the unit for which they work. Even after the initial shock, job creation in organised sector could never take a decent pace. In 1991, 13.8% of India’s workforce came in this category. After 26 years, the proportion is still only 21%. In 1991, such employment constituted 31.8% of China’s workforce. Today it is 63.6%. For most of the developed countries, it is more than 80%. The high growth years that followed the economic liberalisation failed to create decent jobs and the wealth created in a booming economy was cornered by the elite class.

Global experience suggests that among the most effective affirmative actions that help in elevating poverty are universal access to affordable health and education facilities. Oxfam’s report observes that India spends 1.3% of its GDP on health – much lower than the commitment made under the National Health Policy, 2017 to increase this to 2.5% of GDP by 2025. Similarly, India’s spending on education has hovered at under 4%, despite successive governments’ electoral commitment to spending 6% of its GDP on education.

India attracts a large number of foreign patients for medical tourism. On the other hand, only 11% of its Sub Health Centres (SHC) and 16% of Primary Health Centres (PHC) meet the Indian Public Health Standards (IPHS). India manages to simultaneously rank 5th on the Medical Tourism Index and 145th among 195 countries in terms of quality and accessibility of healthcare.

Indian government spends about Rs 1,112 per person on public health every year which is less than the consulting fee for most of the private hospitals. Indians, therefore, have no other choice but to spend out of pocket on health. As a result, 63 million people are pushed into poverty every year. A fifth of the ill in both rural and urban areas deny themselves treatment. Insurance does not offer an alternative, not least given that most insurance schemes (including the new Ayushman Bharat) fail to cover outpatient costs that account for 68% of expenses.

Push to private schools has contributed to social segregation with children of the rich and poor in India growing up in parallel universes. There is a two tier education system. Children from financially better off families attend private schools with better facilities and smaller class sizes which extend economic and social advantages of the already more privileged children. This has created an educational system stratified by social class with education quality determined by how much a family can pay. A child from poor family with a substandard education in his village will find it difficult to compete with a child who got best education in a school in a metro. Because of unequal access to education a poor child will most likely land up in a low paying job as compared to a rich child and it will be difficult for him/her to lift his family from poverty.