The debate and discussion around inequality and redistribution has been going on for over a thousand years. As a result two things have become absolutely clear: it’s desirable and it should be within reason. The desirability of it takes care of the moral aspects of an excessive concentration of wealth. The aspect of reasonableness takes care of the economic consequences. But in democracies that depend on voting there is a third aspect that the original proponents of redistribution of wealth had never considered: politics.
This aspect refuses both to consider the moral imperatives and the economic implications. In consequence, electoral democracies pose the issue in its most extreme forms, namely, all or nothing, mangalsutras or plutocracy, expropriation or concentration of both wealth and inequality. This approach achieves nothing, especially in a country like India which from the very start in 1947 has been consistently striving to strike a balance. The Uttar Pradesh Zamindari Abolition and Land Reforms Act 1950, had sought to redistribute surplus lands. Vinoba Bhave sought to achieve the same result via voluntary action, namely, the Bhoodan movement. The Hindu Succession Act of 1956 ensured that an estate would be divided equally between all successors and not go just to the eldest son. Then came the taxes recommended by Nicholas Kaldor: the gift tax, the annual wealth tax and the capital gains tax. An inheritance tax had already been imposed in 1953. These taxes were followed up by a steady increase in income taxes until in 1973 the marginal rate reached over 100 per cent!
The State governments were also doing their bit — by not collecting taxes due to them in the interests of the poor. To supplement their non-efforts there were the Finance Commissions and the Planning Commission. It’s a long list that gives ample evidence of India’s efforts at redistribution and prevention of concentration of wealth. That said, the rates of taxation and inheritance duties, the mode and extent of redistribution, the legality of expropriation, the issues of compensation to those who are expropriated and the constitutional guarantees have been subjects of debate since the early 1950s. All institutions of the Indian state have sought to dampen the enthusiasm of politicians and by and large they have been successful. The politicians tried to reduce the freedom of the judiciary (fourth amendment) but the judiciary responded a decade-and-half later with the doctrine of ‘basic structure’. The politicians responded with the 44th amendment that says the right to property is not a fundamental right. And now we have a nine judge bench examining Article 39 that talks about community resources and who has the right over them.
In sum, India has always been aware of the problem of redistribution and has been trying hard to solve the problem. It was wholly unnecessary, therefore, for an important opposition figure to speak in an intemperate manner about the problem. It has provoked an equally intemperate and regrettable response from the ruling party.