The recently released Hurun List for India’s Richest shows that the pandemic was inconsequential for a whole bunch of people. To slow down. Demand paralysis. It just doesn’t make sense. They made a lot of money even as poverty and income inequality raced around the world. Up to 1,007 people have accumulated Rs 1,000 crore or more; and over the past year, their cumulative wealth has increased by 51%. A collapsing economy doesn’t seem to matter. We produced 58 more billionaires than last year – a high score of 237.
All the big names are there at the top. Gautam Adani stormed second, quadrupling his wealth from 1.40 crore lakh to 5.06 crore lakh, and overtaking China’s No.1 – bottled water producer Zhong Shanshan. Brother Vinod Shantilal Adani also did. He’s there at # 8 with 1.32 lakh crore. Mukesh Ambani and his family, with a wealth of 7.18 lakh crore, always stay on top. India has been well aligned with the world’s rich. The Global Hurun List, released in March this year, showed the world to have 3,228 billionaires, up 414 from last year. Despite the coronavirus slowdown, the total wealth of these billionaires increased 32% to $ 3.5 trillion.
Poverty at the bottom
Equally striking and obscene is the devastation at the other end of the scale. A conservative World Bank estimate about a year ago said that “the Covid-19 pandemic is expected to push an additional 88 to 115 million people into extreme poverty this year, with the total reaching 150 million by 2021 “. (Extreme poverty, defined as living on less than $ 1.90 or $ 150 per day.)
In July of this year, a projection for India based on data from the CMIE said: “218 million more people (168 million in rural areas and 50 million in urban areas) would have been pushed into poverty.” India, officially around 4 lakh of people lost their lives to the coronavirus. The economy’s contraction in the last fiscal year to 7.3% is the worst the country has seen since independence. The informal sector, which represents 920 million jobs, or 75% of the total available, has lost 15%, or about 122 million jobs. So how did these islands of wealth make money?
The slot machine
There was money to be made in the “fear” economy. Hundreds of drugs, effective or not against Covid-19 were requested. 4,700 injections of remdesivir by injection of questionable therapeutic value have generated billions. Cashless and home delivery networks like Amazon have cashed in. The Hurun List reveals that pharmaceuticals are the number one generator of billionaires, with 130 new entrants. Chemicals and software are not far behind.
Globally, as the ranks of the poor increased, the number of millionaires rose from 5.2 million to 56.1 million, according to a Credit Suisse research paper. The recovery of the stock markets and the surge in house prices have helped to increase their wealth. The researchers admitted that wealth creation appears to be “completely detached” from the economic woes of the pandemic.
In India, too, the stock markets had a surreal run with the NSE’s Nifty 50 index rising 65% in a 12-month period after the outbreak of the first pandemic in March. The rally has nothing to do with the Covid-19 slowdown and the actual performance of the economy or individual businesses. Institutions and people inject money and collect it. Foreign Institutional Investors (FIIs) within the 12-month window bought $ 34.9 million in shares. Many have prospered but it has nothing to do with fundamentals.
There is no quick fix to this extremely unequal world, but a progressive tax is a dire necessity. Global charity Oxfam says the combined wealth of the world’s 10 richest men – Jeff Bezos, Eon Musk Mark Zuckerberg et al – increased by $ 540 billion during the pandemic. The charity says this amount would be enough to keep the world from sliding into poverty because of the virus and pay for vaccines for everyone.
In another appeal, Oxfam says: âIf India’s top 11 billionaires are taxed just 1% on their wealth increase during the pandemic, it will be enough to increase the allocation from the Jan Aushadi regime, which provides affordable medicines to the poor and marginalized.
Another important step that India can take is the direct cash transfer to targeted sections that suffer from extreme poverty. This is what many, including the World Bank and former RBI chief Raghuram Rajan, have long advocated. However, the government preferred to abandon the subsidy programs and change the names of the existing programs. These did not work.
The US government recently passed a $ 1.9 trillion (138 lakh crore) stimulus package, which includes handing out $ 1,400 in checks to American families. It may be a big blow to the Indian government, but the money in the pockets of the very poor, even in small amounts, would help them survive the fallout from the pandemic.