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   Wednesday, October 24, 2018
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Bailing out the richest
By Devinder Sharma



Forbes magazine says India has almost twice the number of billionaires than last year. Strangely these richest of the rich gained when the world economy was badly hit by the meltdown. Was it despite or due to the economic recession?


Economic stimulus package helped billionaires
to increase wealth (courtesy: ndtv)

In 2009 when the world was bogged down by economic recession, and some ripples were also felt in India, an estimated $20 trillion was pumped in to boost the global economy. India too provided a bailout package, in three instalments, totalling to approximately Rs 3.5 lakh crore.

In February 2010, when Finance Minister was to present the annual Budget, the media had launched an orchestrated campaign saying that the economic bailout package should not be withdrawn. You could see almost every TV channel (and the pink newspapers) bombarding day and night how damaging it would be for the national economy if the bailout package was withdrawn.

Participating in the discussions on Budget, I did make it loud and clear (to the discomfort of the economists on the TV panels) that the bailout package was not required in the first instance, and should be withdrawn immediately.

The bailout packages came out handy for the rich to accumulate more wealth, and that too in the name of rebuilding the global economy.

Subsequently, I heard the Prime Minister say that only 1.5 lakh jobs were created in 2009 (against the projected 12 million). I guess this statement was used by the industry and business to defend the need for the continuation of the bailout package.

In my understanding, the bailout package was actually a dole to the industry and business to strengthen its bottom line. If you think that the layoffs in the industry were because of the economic recession, you are highly mistaken. Recession was very conveniently used by the industry to go in for labour-shedding, nothing more than that. Ask those journalists who have lost their job recently, and they will tell you they were laid-off not for reasons of economic meltdown.

Nevertheless, the economic meltdown provided an excellent opportunity for the rich to amass more wealth. Otherwise there is no way that the world's wealthiest club can grow wealthier at times of an economic meltdown. The bailout packages came out handy for the rich to accumulate more wealth, and that too in the name of rebuilding the global economy.

According to Forbes magazine, the richest-of-rich club has 49 billionaires from India, up from 24 last year. Isn't it strange that at a time when the sails were fluttering, the number of billionaires from India should actually double? Moreover, the industry could not create more jobs (1.5 lakh in a year is not even a drop in the ocean) but could ensure that its wealth swells. How can that be possible at a time when the chips were down? Common sense tells us that nothing miraculous happened in 2009 that could bring more fortune to the fortunate.

What made the wealth of the richest actually multiply were the bailout packages. It is as simple as that. In other words, the world follows an amazing economic prescription. Socialising the costs, privatising the profits. You and me pay for the bailout packages, and the rich pocketed it neatly.

In 2007-08, when the world was faced with an unprecedented food crisis, the stocks of the food giants swelled to an unprecedented level. The poor went hungry whereas the food companies profited.

This happens every time when the world faces an economic crisis (and you can see this turning the tables for the concerned companies in its stock rankings). In 2007-08, when the world was faced with an unprecedented food crisis, the stocks of the food giants swelled to an unprecedented level. The poor went hungry (with the world adding 100 million more to the hungry list) whereas the food companies profited. More recently, when India was faced with an unprecedented rise in sugar prices, the stocks of nearly 25 sugar companies went up.

Mainline economic thinking has made it much easier (and simple) for the corporates and big business to make more money. You don't have to indulge in any financial swindle, the economists have done it for you, and that too without the world even questioning what in simple terms means committing the biggest crime against humanity.

 
Disclaimer:
The views expressed above are personal and do not necessarily reflect the views of d-sector editorial team.
 

Devinder Sharma  |  hunger55@gmail.com

Devinder Sharma is an award-winning journalist, writer, and researcher globally recognised for his analysis on food, agriculture and trade policy. 

Write to the Author  |  Write to d-sector  |  Editor's Note
 


 Other Articles by Devinder Sharma in
Socio-Economic Development  > Indian Economy > National Policies and Programmes

Fooling the farmer
Wednesday, November 30, 2011

The proposal to allow multinational retail giants to enter India is pushed on the pretext of its possible benefits for the poor farmers. What many do not know is that big retail has only aggravated problems for the farmers everywhere they established their chain of mega stores.

Better late, than never
Tuesday, March 01, 2011

Pranab Mukherjee has made a beginning to improve the conditions of the deprived and marginalised sections but the policies need much higher allocations to make any positive transformation in the lives of the poor.
 
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Corruption Watch

The bad news is that corruption has not only sustained but has grown in size and stature in the country. With scams being a regular feature, seventy per cent respondents in a survey have rightfully opined that corruption has continued to increase in India. One in every two interviewed admit having paid a bribe for availing public services during last one year. Transparency International's latest survey reveals that the political parties top the chart for the most corrupt public institutions, followed by police force and legislatures. No wonder, India continues to make new records on the global corruption arena!

The shocking revelation is that the health and education sectors haven't remained untouched by this phenomenon. With 5th and 6th positions respectively for these sectors on the public perception chart on corruption, corruption has crept insidiously into these sectors of hope for the masses. With bureaucracy being fourth in the list of corrupt institutions in the country, corruption seems to have been non-formally institutionalized with little hope if public services would ever be effective in the country. With economic growth having literally institutionalized corruption, are we now expecting corrupt to be socially responsible - a different CSR.

Poor. Who?

Not giving 'aid' to India is one thing but calling it 'rich' is quite another. If one in three of the world's malnourished children live in India, what does average daily income of $3 indicate? It perhaps means that there is a relative decline in poverty - people are 'less poor' than what they used to be in the past. But having crossed the World Bank arbitrary threshold of $2 a day does not absolve the 'developed' countries of their obligation to part with 0.7 per cent of their Gross National Income in development aid. Should this three-decade old figure not be revised?  

An interesting debate in UK's House of Commons delved on future of development assistance by the British Government. While prioritizing limited resources has been a concern, there has been no denying the fact that development aid must be guided towards tangible gains over a short period of time to start with. There are difficult choices for elected governments to make - should they invest in long-term primary education or in short-term university scholarships? Which of these will bring gains and trigger long-term transformation in the society. As politicians continue to be divided on the matter, poverty persists!!   

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