Why in the News? 

Since the Congress Party released its Election Manifesto ’Nyay Patra’, the word ‘redistribution’ has dominated the election discourse.

Arguments against the redistribution of wealth:

• Against the fair mean: Wealth redistribution stems from a ‘zero-sum’ thought to reduce economic disparity. However, this approach conflates the process of acquiring wealth with the outcome, potentially penalizing even those who acquired their wealth through fair means.
• Hindrance to Economic Growth: Implementing confrontational policies to make the rich poorer can hinder investments and trigger capital flight, which is essential for economic growth. Economic growth is necessary for increasing the overall economic pie and improving prosperity for all.

Measures needed to reduce Inequality:

• On Wealth and Inheritance Taxes: Wealth and inheritance taxes are seen as potentially punitive measures that may not effectively address economic inequality. The government needs to focus on fixing systemic issues rather than penalizing the wealthy.
• On Policies: Economic growth is emphasized as crucial for addressing inequality. Policies should prioritize investment and avoid hindrances that might deter capital flow.
• Job Creation and Labour Market Policies: Jobless growth and imbalance in capital-labour relations contribute to inequality. Labor market-focused policy incentives, such as employment-linked schemes and promoting labor-intensive activities, are proposed to rebalance this skew.
• Overhaul of the taxation structure: The taxation system is criticized for burdening the poor and middle class disproportionately compared to corporations. There’s a call for an overhaul of the taxation structure to ensure fairness and simplicity, with a focus on lowering the tax burden for the common person.
• Social Welfare Programs: Social welfare programs are deemed essential to provide a safety net for the poor until they can benefit from economic growth. Funding for such programs can come from a combination of faster growth, efficient tax collection, and welfare delivery mechanisms.

Steps taken by the Government:

• For addressing Social Inequality

• • • Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) and Deendayal Antyodaya Yojana- National Urban Livelihoods Mission (DAY-NULM): These schemes aim to create additional employment opportunities in both rural and urban areas.
    • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): This scheme provides a legal guarantee for 100 days of employment per year to rural households
    • Pradhan Mantri Awas Yojana: This scheme provides affordable housing to the urban and rural poor

• For improving Financial Inclusion

• • • Atal Pension Yojana: This pension scheme targets the unorganized sector and private sector employees without pension benefits
    • Pradhan Mantri Jan Dhan Yojana: This scheme aims to provide universal access to banking facilities for all households

• For enhancing Access to Basic Necessities

• • Pradhan Mantri Ujjwala Yojana: This scheme provides LPG connections to women from Below Poverty Line (BPL) households
  • Swachh Bharat Mission: This program focuses on providing toilets for every household and cleaning India’s cities and villages

Conclusion: The Indian government implements schemes to reduce inequality. For example targeting financial inclusion, health protection, and economic development to reduce inequality. Beneficiaries include rural and urban poor, low-income families, and women from Below Poverty Line households.

Mains PYQ:

Q Can the vicious cycle of gender inequality, poverty, and malnutrition be broken through the microfinancing of women SHGs? Explain with examples. (UPSC IAS/2021)

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