Total Revolution

Like Steven D. Levitt, the author of that amazing book Freakonomics believes that if you have the right data and you ask the right questions, the modern world is not impenetrable despite a surfeit of obfuscation, complication and downright deceit. It maybe even more intriguing than we think. 'All it takes is a new way of looking'. One great thing for analysts and commentators whose area of interest is the American economy is that economists and researchers keep churning out a lot of authentic data to analyze and comment upon and figure out which way the world is headed. People interested in the India story are not so lucky. The data available is either obsolete or sketchy. Though things are changing, they are not changing fast enough.

Disparity in the distribution of wealth, especially in a democracy should interest everyone who is involved in wealth creation; which should mean practically everyone. While a democratic setup provides unlimited opportunities for wealth creation, unmatched in any other system, there is something disturbing about great extremes of wealth and poverty.

Let us look at some data in the world's richest democracy - USA and the world's largest democracy - India. According to some unsettling data about incomes in America released by economists Emmanauel Saez of the University of California and Thomas Picketty of the Paris School of Economics, 44% of pretax income was received by the richest 10% (14 million people) of the population. Which means that 90% of the population shared the balance 56% of the pretax income. 6.3% takes home 33% of the total income. More astonishing is the fact that 1% of the population received a whopping 17% of the pretax income in 2005. Average annual income of this top 1% population(1.4 million) was $371,000 was more than 10 times the per capita income of an average American. The income disparity between the richest 10% of the American population and the poorest 10% is even more glaring. The average income of the top 10% income earners is more than 24 times the average income of the poorest 10%. The causes of this inequality are far from clear and a lot of work needs to be done. The data clearly shows that income distribution in the world's richest democracy is far from optimal yet their poor do not live a dog's life. They have social security and opportunity to acquire skills to become economically viable. if they do not it is more out of choice and not out of the absence of infrastructure or opportunity.

Looking at a similar data about the world's largest democracy the picture is not so pretty. Though India is soon slated to be the fourth most prosperous nation in the world, the chasm between the rich and the poor is so glaring that you could be living in two different worlds at the same time. Though the data on India is neither so current nor so correct but it points at facts which are symptomatic of many future trends.

Going by the World Bank statistics, the richest 10% of India's population is more than 7 times as rich as the poorest 10 percent. Even if this is assumed to be correct, this is a lot inequality. But considering that 35 percent of India's population is living on less than one US dollar a day (or around Rs. 42), the rich poor divide is far more alarming than the World Bank calculations suggest.
So what is the point of the whole exercise?

The point is that while India is being heralded as one of the major players in the world economy, we have more than 350 million people trying to survive on less than a dollar a day. How is their life in any way elevating or even be called human?
The challenge is to to replace the 'cram education system' with an infrastructure for skill development which will provide every Indian the opportunity to acquire proper skills to become economically productive.

We sometimes end up drawing wrong conclusions from the available data. First thing that needs to be understood is that, the rich getting richer are not the cause of the poor getting poorer. This should be evident from the fact that the gap between the richest 10 percent in the USA take home 24 times the amount the poorest 10 percent earn against the 7 times in India. Yet the the condition of the poorest class in India verges on the bestial. Though the trend towards a concentration of higher percentage wealth in smaller and smaller percentage of the population is quite evident, it does not mean that the number in absolute terms would shrink as a result. But it is also very evident that unless people are encouraged to acquire skills and life changing relevant education, they will be frustrated and marginalized in the 21st century.
Secondly, the poverty of the poor reflects low skills and lack of education. The best way to reverse the trend towards greater economic equality is for the government and the people to focus on creating a more relevant HRD system and move away from the mere monotony of pedagogy in our schools. India cannot play the leading role in the world economy in the information age without bringing about massive changes in the education system which is at best the industrial age version of the colonial education system. Otherwise the huge human resource of this 'young' nation will go waste. There is lots to be done and done fast. The government could take the lead but there is a need for as some thing like the 'Total Revolution' in which social organizations, NGOs, eminent individuals and industrial houses should put in their best effort and make India a real power where not only the macro figures of development are impressive but its benefits trickle down to the poorest of the poor by way of opportunity not alms.