Wealth of India’s 10 Richest Enough to Fund School, Higher Education for 25 Years: Oxfam India

The report said that a wealth tax on the 98 richest billionaire families would finance Ayushman Bharat, the world's largest health insurance scheme, for more than seven years.

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New Delhi: Oxfam’s annual report on inequality in India focused on the country’s governance structures that promote the accumulation of wealth by a few, while failing to provide safety nets to the rest of the population. The report titled ‘Inequality Kills’ also highlighted the economic impact of the COVID-19 pandemic on the rich and the poor in India.

The report said that Indian billionaires saw their combined fortunes more than double during the COVID-19 pandemic, and their count shot up by 39% to 142, while the wealth of the ten richest is enough to fund school and higher education of children in the country for 25 years.

It was released on the first day of the World Economic Forum’s online Davos Agenda summit.

Oxfam India further said that an additional 1% tax on the richest 10% can provide the country with nearly 17.7 lakh extra oxygen cylinders, while a similar wealth tax on the 98 richest billionaire families would finance Ayushman Bharat, the world’s largest health insurance scheme, for more than seven years.

The COVID-19 pandemic saw a huge rush for oxygen cylinders and insurance claims during the second wave last year.

The report further added that by taxing just these super-rich families only 1% of their wealth, India could fund its entire vaccination programme cost of Rs 50,000 crore ($6.8 billion). “Instead, the burden of taxation in India currently rests on the shoulders of India’s middle class and the poor, and not addressing the proposal for a one-time tax on the wealthy, for COVID-19 recovery, has resulted in the government using the only other available option i.e., raising funds through indirect tax revenue which penalises the poor,” the report said.

Transferring economic benefits from the poor to the rich 

In September 2019, before the COVID-19 pandemic, the Narendra Modi government had slashed corporate tax rates for domestic manufacturers from 30% to 22%, and for new manufacturing companies, the rate was reduced from 25% to 15%, provided they do not claim any exemptions. The government took 36 hours to implement this decision, as reported by Hindustan Times, with the help of Rule 12 that empowers the prime minister to take a decision and get the cabinet’s ratification later. US-based credit ratings agency S&P Global had termed the move “credit negative”.

The Oxfam India report added that the corporate tax cut has resulted in a loss of Rs 1.5 lakh crore, which has contributed to the increase in India’s fiscal deficit.

For the first time in 12 years, income tax collections were higher than the corporation tax collected by the government. Income tax is paid by by individuals and Hindu Undivided Families (HUFs), while corporation tax is tax paid by companies on the profit they make. Economic commentator Vivek Kaul reported in June last year that this happened at a time when profits of listed companies rose to 2.6% of the gross domestic product (GDP) – the highest since 2014-15.

Also read: When It Comes to Alleviating COVID’s Economic Pain, Why Are India’s Billionaires Unmoved?

In his piece, Kaul said that “income tax rather than corporation tax should have been cut in September 2019. That would have put more money in people’s hands who would have likely spent it, helping the economy. But the government cut the corporation tax instead.”

The Oxfam India report highlights how the government managed to compensate the shortfall in direct taxes (income tax, corporate tax and capital gains tax) by increasing indirect taxes (goods and services tax, excise duty, customs duty and VAT) during the pandemic. It’s important to note that a rise in fuel prices impacts the prices of essential commodities such as foodgrains, which impact the poor more than the wealthy.

On wealth inequality, the Oxfam report further said that 142 Indian billionaires collectively own wealth of $719 billion (over Rs 53 lakh crore), while the richest 98 of them now have the same wealth as the poorest 55.5 crore people in the bottom 40% ($657 billion or nearly Rs 49 lakh crore).

If each of the 10 richest Indian billionaires were to spend $1 million daily, it would take them 84 years to exhaust their current wealth, while an annual wealth tax applied to multi-millionaires and billionaires would raise $78.3 billion a year that would be enough to increase government health budget by 271% or eliminate households’ out-of-pocket health budget and leave some $30.5 billion.

Noting that COVID-19 may have begun as a health crisis but has become an economic one now, Oxfam said the wealthiest 10% have amassed 45% of the national wealth while the share of the bottom 50% of the population is a mere 6%.

It further said that the inadequate governmental expenditure on health, education and social security has gone hand-in-hand with a rise in the privatisation of health and education, thus making a full and secure COVID-19 recovery out of reach for the common citizen.

“We call upon the government to redistribute India’s wealth from the super-rich to generate resources for the majority by reintroducing the wealth tax and to generate revenue to invest in the education and health of future generations by imposing a temporary 1% surcharge on the rich for health and education,” it said.

Also read: Where Do India’s Tycoons Fit Into Modi’s Blueprint for Economic Growth?

Higher taxes on the rich can support the poor

On gender inequality, Oxfam India said women accounted for 28% of all job losses and lost two-thirds of their income during the pandemic.

It further said India’s 2021 budget allocation for the Ministry of Women and Child Development is less than half of the total accumulated wealth of the bottom ten of India’s billionaire list and just a 2% tax on individuals with an income of over 10 crore could increase the ministry’s budget by an astounding 121%.

If the wealth of the first 100 billionaires is accumulated, they could fund the National Rural Livelihood Mission scheme, responsible for creating Self Help Groups for women, for the next 365 years.

On health inequality, the report said a 4% wealth tax on the 98 richest families in India would finance the Ministry of Health and Family Welfare for more than two years and noted that their combined wealth is 41% more than the Union Budget.

On education inequality, the study said a 1% of tax on wealth of the 98 billionaires in India can fund the total annual expenditure of the department of school education and literacy under the Ministry of Education, while a 4% of tax on their wealth can take care of Mid-Day-Meal programme of the country for 17 years or Samagra Sikshya Abhiyan for six years.

Similarly, a 4% tax on the wealth of the 98 billionaires would be enough to fund the Mission POSHAN 2.0, which includes Anganwadi Services, POSHAN Abhiyan, Scheme for Adolescent Girls, and National Creche Scheme, for ten years.

(With inputs from PTI)