Economist Thomas Piketty has an unusual solution to India's economic growth challenges, one that the super rich of the country presumably won't be to pleased with. Tax the rich more, he says, adding that the most affluent classes should 'behave responsibly' and partake in the long drawn process of ending social inequalities in the country.
In an interview to The Indian Express, he says, "What’s new in my research is that I have tried to put together 200 years of historical data on inequality from 20 countries. The main lesson for India is probably that excessive inequality of the kind that we see in India today is bad for growth in the long run. And probably the main lesson for the Indian elite is that they should, I mean, I hope that the Indian elite will do better than the Western elite."
He points out to The Hindu that India has zero wealth tax and the tax-to-GDP ratio is a mere 11 percent. If the rich agree to pay more taxes and the ratio can be brought up to at least 30-35 percent, India can even begin to think about bridging the inequalities that exist between its classes.
Piketty explains, "You know, in India right now, the level of taxation and the level of public funding into girls education, infrastructure is very insufficient and is more comparable to 19th century Europe or early 20th century Europe than to what we see in rich countries today. So I think that at some point the Indian elite will have to pay more tax and invest more into reforms like girls education, etc."
Speaking at the Jawaharlal University on January 20, the author of the bestseller Capital in the Twenty-First Century, Piketty also spoke about the 'extreme lack of transparency for data, especially income tax data', reports Quartz.
The economist added that China has been more successful in implementing a strategy to finance public services. "The Chinese Communist Party has been much more successful than the democratic and parliamentary Indian elites in mobilising significant resources to finance a strategy of social investment and public services," he said.
He observed that the country's income and wealth concentration was extremely high and was closest to Brazil and South Africa. "It is probably close to Brazil and South Africa (top 10 per cent income share = 50-60 percent of total income) than to U.S. (top income share = 45-50 per cent of total income) or Europe (top 10 per cent income share = 30-35 per cent)," he noted.
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