Why the budget is crucial for democracy
The total net worth of 614 billionaires rose by $931 billion between March and October. The employment rate of 25% of the population with the highest income recorded a jump of 1.6% over the pre-pandemic period.
But this limited prosperity for some happened even as the economic condition of the majority, particularly the poor, kept deteriorating. Some were killed by the pandemic, while most of them were suffering from the other disasters indirectly caused by the pandemic.
By December, 10 million Americans had lost jobs, while numerous small businesses had been deprived of their work.
The dichotomy is not unique to the US. The New Policy Institute estimated in June last year that the top 20% of British super-rich had earned $29.3 billion during the lockdown.
Even “communist” China saw a spike in the wealth of the rich. In India, the income of a select few has grown so much that observers suggest that all those who need support can be vaccinated with the extra wealth, or that they can even afford to spend on schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme for years — remember this scheme has served as a crucial safety valve and has helped feed millions of people in India’s rural hinterland.
All of this has prompted some economists to advocate the extra income of the super-rich.
During the pandemic, there was a 12% decrease in the income of organised sector employees. An average Indian lost his earning by 17%. According to an eye-opening survey by Oxfam, women have been the worst victims. Their unemployment rate has registered a 15% increase.
Will the finance minister take care of all those who have lost out and suffered in the budget to be presented on Monday? Jobs were lost, shelters disappeared, and millions of people had to walk hundreds of kilometres to get home. These destitute people are most in need of support from the government.
All of this points to a worrying pattern — economic inequality is increasing all over the world and, unfortunately, there is little scope for immediate improvement since the pandemic continues to wreak havoc. The vaccine is now available, but the unpredictability of the disease and emergence of new strains means there is no room for complacency.
This also means that any assessment of economic recovery can only be tentative and not certain. Countries such as India, which were facing an economic slowdown even before the Covid-19 crisis, will find it even harder to recover.
This is not good news for the democratic world. History shows that persisting economic inequalities sows the seeds of dissatisfaction.
This dissatisfaction leads to mistrust, and mistrust often forces the common citizen to hit the streets. Recently, India witnessed the fury of the farm movement on the streets and Red Fort in Delhi.
This happened even as the government was giving clear signals of retreating and had made reasonable concessions — but the agitators were not ready for anything less than the withdrawal of the three farm laws. They had been on the road, at Delhi’s borders, for more than two months.
Tensions had increased, culminating into the events of January 26. Some captured the Red Fort and hoisted a religious flag.
The dignity of the Indian Republic suffered an unprecedented setback, but the episode also shattered the morale of the peasants and tarnished the credibility of their struggle.
Or take another episode — on January 6, the US Capitol witnessed an insurrection of sorts. It appears that citizens are increasingly losing trust in their elected government and the system that has been in place for years in democratic countries. Many observers see this trend as a threat to the democratic system, born out of a mix of anxieties and grievances, often economic in nature.
Those exercising power must find ways to tackle this. In India, Nirmala Sitharaman’s second full budget can mark the beginning of this effort to tackle inequality, distress, and provide hope to citizens, for it is with economic well-being that democracy too will remain robust.
By Shashi Shekhar is editor in chief, Hindustan