At Davos, the world’s most influential people made politically correct noises on rising inequality. They were embarrassed by recent studies on wealth and income disparities, beginning with Credit Suisse in October and followed by World Bank and Oxfam. India, China and the US have seen a spike in wealth inequality.

India’s response, from the political establishment to the media, has ranged from stony silence to shrill, over-defensive outbursts. The Prime Minister’s speeches skirt the subject, while the Opposition has done no better. The Aam Aadmi Party, with its sprinkling of socialist ideologues, has had nothing to say. Of the comatose Left, the less said the better. The Congress, having presided over the rise in post-reform inequality, has no leg to stand on. If the views of media pundits were to be compressed into a few words it would be: focus on poverty by pursuing growth; tackling inequality will not help the poor. Mainstream economists argue that India and China, by pursuing growth (alone), have pulled large numbers out of poverty. But can in-your-face inequality be explained away so glibly?

Spin doctors fall back on the ‘Kuznets curve’ which argues that inequality increases sharply in the initial stages of development but evens out later. French economist Thomas Piketty overturns this thesis, showing that inequality in the West fell gradually between 1910 and 1970 but increased thereafter. The rise coincides with the financialisation of economies. India’s rising inequality stems from crony capitalism and financialisation. Forget about the Kuznets curve here if it didn’t work elsewhere.

Theories apart, inequality ought to be morally repugnant. German writer Gunter Grass was appalled by how we Indians were unmoved by misery and squalor. That was in 1987-88 when India was a poorer, but less unequal place. The smugness quotient is on the rise.

Deputy Editor

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