The just-released Hurun List for India’s richest shows that the pandemic was inconsequential for a whole bunch of people. Slowdown. Demand paralysis. All this is meaningless. They made pots of money even as poverty and income inequality galloped round the globe. As many as 1,007 individuals have accumulated Rs 1,000 crore or more; and over the last year their cumulative wealth increased 51%. A crashing economy didn’t seem to matter. We produced 58 more dollar billionaires compared to last year - a hefty score of 237.
All the big names are there at the top. Gautam Adani stormed into second spot quadrupling his wealth from `1.40 crore to `5.06 lakh crore, and overtaking China’s No.1 — the bottle water producer Zhong Shanshan. Brother Vinod Shantilal Adani has also made it. He’s there at No.8 with `1.32 lakh crore. Mukesh Ambani and family, with wealth of `7.18 lakh crore, still remain on top. India has been well in step with the global rich. The Hurun Global List, released in March this year, showed the world had 3,228 billionaires, up 414 from last year. Despite the coronavirus slowdown, the total wealth of these billionaires rose 32% by $ 3.5 trillion.
Poverty at the bottom
The devastation at the other end of the scale is equally stark and obscene. A conservative World Bank estimate about a year ago said the “the Covid-19 pandemic is estimated to push an additional 88 million to 115 million people into extreme poverty this year, with the total rising to as many as 150 million by 2021.” (Extreme poverty, defined as living on less than $1.90 or `150 a day.)
By July this year, a projection for India based on CMIE data said: “218 million additional people (168 million in rural and 50 million in urban areas) would have been pushed into poverty.”In India, officially about 4 lakh people have lost their lives to the coronavirus. The contraction of the economy last fiscal at 7.3% is the worst the country has seen since independence. The informal sector, which accounts for 920 million jobs, or 75% of the total available, shed 15% or about 122 million jobs. So how were these islands of wealth making money?
The money machine
There was money to be made from the ‘fear’ economy. Hundreds of drugs that worked or did not work against Covid-19 were in demand. Remdesivir injections at `4,700 a jab with doubtful therapeutic value generated billions. Cashless and home-delivery networks like Amazon cashed in. The Hurun list reveals that pharmaceuticals is the No.1 generator of billionaires, contributing 130 new entrants. Chemicals and software are not far behind.
Globally, while the ranks of the poor increased, the number of millionaires increased by 5.2 million to 56.1 million, a Credit Suisse research paper said. Recovering stock markets and soaring house prices helped boost their wealth. The researchers conceded wealth creation appears to be “completely detached” from the economic woes of the pandemic.
In India too, the stock markets have had a surreal ride with the NSE’s Nifty 50 Index rallying 65% in a 12-month period after the outbreak of the first pandemic in March. The rally has no relation to the Covid-19 slowdown, and the actual performance of the economy or individual companies. Institutions and people are pumping in money, and cashing out. Foreign institution investors (FIIs) in the 12-month window bought $34.9 million worth of shares. Many have prospered but it has nothing to do with fundamentals.
There is no quick fix to this hugely unequal world, but a progressive tax is a crying necessity. The global charity, Oxfam, says the combined wealth of the world’s 10 richest men - Jeff Bezos, Eon Musk Mark Zuckerberg et al - rose by $540bn during the pandemic. The charity claims this amount would be enough to prevent the world from falling into poverty because of the virus, and pay for vaccines for all.
In another appeal, Oxfam says, “If India’s top 11 billionaires are taxed at just 1% on the increase in their wealth during the pandemic, it will be enough to increase the allocation of Jan Aushadi Scheme by 140 times, which provides affordable medicines to the poor and marginalised.”
Another important step India can take is direct money transfers to targeted sections that suffer from extreme poverty. It is what many including the World Bank and former RBI chief Raghuram Rajan have been advocating for long. However, the government has preferred to dole out subsidy schemes and rejig names of existing ones. These haven’t worked.
The US government recently passed a $1.9 trillion (`138 lakh crore) stimulus package, which includes delivering cheques of $1,400 to American families. This may be a tall order for the Indian government, but money in the pocket of the very poor, even in modest sums, would help them survive the fallout of the pandemic.