[Like the rich in the
United States who use the “job creator” tag to lobby for tax breaks, India’s
elite has devised the middle-class narrative to capture more public resources
like fuel, food and education subsidies, often at the cost of the country’s
poor millions. Using their proximity to the center of power and media
amplification, the rich, masquerading as the middle class, have a
disproportionate influence in policy formulation and the Indian government’s
allocation of funds.]
By Sambuddha Mitra Mustafi
If you are an Indian
reading this, you are very likely among the top 10 percent in the country,
since you have Internet access. It is also very likely that you, just like me,
consider yourself middle class, though we are not anywhere close to the middle of
this country in income or standard of living. We may well have trended the
hash tag#IamSoMiddleClass last
month, but being in the top decile of a 1.2 billion population, perhaps it’s
time to ask # Why I Call Myself Middle Class?
“The elite in many
parts of the world do not like to be called the elite,” said Dipankar Gupta, a
sociologist. “In the U.K., they called themselves the nobility; in current
American discourse, the elite are called the job creators. In India, the elite
call themselves middle class.”
Like the rich in the
United States who use the “job creator” tag to lobby for tax breaks, India’s
elite has devised the middle-class narrative to capture more public resources
like fuel, food and education subsidies, often at the cost of the country’s
poor millions. Using their proximity to the center of power and media
amplification, the rich, masquerading as the middle class, have a
disproportionate influence in policy formulation and the Indian government’s
allocation of funds.
The diesel subsidies —
which cost India an estimated $18 billion, according to Montek Singh
Ahluwalia, deputy chairman of the Planning Commission — illustrate
the elite’s capture of subsidies and its consequences. Much of the subsidies
benefit big industries and the so-called middle class, who use the fuel to run
their cars and power generators.
Farmers consume 12
to 18 percent of these subsidies – and those who do are the rich farmers who
can afford tractors or pumps – but the majority of the small farmers hardly use
any diesel.
Because diesel is much
cheaper than gasoline, diesel cars have raced to capture 40 percent of the auto
market, from merely 4 percent in 2000. The fast-growing S.U.V. segment runs
almost entirely on diesel, as do the massive generators that insulate posh city
hotels, offices and residences from power blackouts.
A government panel
report last year called diesel subsidies a “major contributor
to India’s fiscal deterioration” that jacked up the national deficits and
prompted international threats of a ratings downgrade. The report recommended
phasing out diesel and cooking gas subsidies, which the government is now
attempting at the risk of a middle-class backlash and media outrage.
The subsidies for the
well-off don’t stop there. Many rich Indians still pay small amounts like $400
a year for education in the country’s top colleges – a legacy of deep
government subsidies for higher education. In a country where millions still do
not have access to basic primary education, the higher education subsidies have
led to further widening of the gap between the rich and poor, critics say.
The elite capture of
India’s subsidies take a toll on the country’s poorest, who genuinely need the
discount for subsistence. The current public debate over the Food Security Bill
highlights this problem.
Around 20 percent of
India’s population is malnourished, and 43 percent of children under 5 are
underweight. These numbers have changed little despite the impressive economic
growth of the last two decades, with neighbors Pakistan, Sri Lanka and Nepal
doing better than India in the 2012 Global
Hunger Index.
The ambitious Food
Security Bill, approved by the country’s cabinet but held up in a paralyzed
Parliament, aims to provide nearly 70 percent of Indian households with five
kilograms (11 pounds) of heavily subsidized wheat, rice and coarse grains every
month. But critics say this
is a wasteful expenditure, an irresponsible dole from a socialist government
with an eye on parliamentary elections next year.
These critics
conveniently overlook much larger doles from the government that benefit the
rich: for example, this year’s budget waived about
$12 billion in customs duties on the import of gold, silver and jewelry. The
additional costs in the food bill to feed India’s hungry would amount to much
less: $4.5 billion a year.
The economist Amartya
Sen, in advocating the Food Security Bill, wrote:
“The political support for tolerating — and defending — the present profligacy
in catering to the relatively better off contrasts sharply with the fiscal
alarm bells that are sounded whenever proposals for helping the poor, the
hungry, the chronically unemployed come up.”
India is going through
its own version of the American Gilded Age, wrote Jayant
Sinha, managing director of Omidyar Network India Advisors, and Ashutosh
Varshney, a professor of political science at Brown University, in 2011. The
Gilded Age (1865-1900) was marked by fast economic growth, business corruption
and cronyism, a shift from agriculture to industry, rapid urbanization and the
surge of a new middle class.
This was followed by
the Progressive Era, a time of cleansing the system, ousting the corrupt and
channeling private wealth into social causes. Presidents like Theodore
Roosevelt (a Republican) and Woodrow Wilson (a Democrat), received wide support
from middle-class professionals to weed out the corruption of the Gilded Age,
to bring about major reforms in education and economic policies that gave more
Americans a level playing field to prosper.
“Will India’s
political parties fight corruption as a nonpartisan matter?” asked Mr. Sinha
and Mr. Varshney. “Will the rising middle class throw out the corrupt? Will the
wealthy systematically embrace philanthropy?”
The short answer: it’s
too early to know. With only 25 percent of Indians in the middle class and
hundreds of millions impatient to break into the zone, both the barons and the
masses have incentives to glide on the gilded turf for a few more years.
But in the Delhi
street protests, in the philanthropy of software tycoons like Azim Premji and
Narayana Murthy who are working to educate disadvantaged Indians, in the
example of business school students who are giving up corporate jobs to work in India’s
villages, there are faint green shoots of a progressive,
compassionate society, a middle class whose values are evolving past the bling
of its Gilded Age.
