REDISTRIBUTION OF WEALTH (Syllabus: GS Paper 3 – Economy)

Context: Recently, the opposition party's election manifesto pledged a nationwide socioeconomic and caste census to bolster affirmative action for addressing inequality, yet speeches from its leaders suggest a potential inclination towards greater wealth redistribution.

Redistribution of Wealth

• Definition: Redistribution of wealth refers to the process of transferring income and assets from the affluent to the less affluent segments of society.
• Methods: This process is facilitated through various mechanisms such as taxation, land reforms, and welfare programs.
• Purpose: The primary objective of wealth redistribution is to mitigate economic inequality within a society.
• Significance: In recent times, the issue of wealth redistribution has gained prominence due to widening income gaps.
• Global Perspective: Studies, such as those by the Organization for Economic Co-operation and Development (OECD), highlight stark wealth disparities across countries.
• Statistics: For instance, the wealthiest 10% of households control a disproportionate share of total wealth compared to the majority of the population.
• Economic Advocacy: Notable economists like Thomas Piketty advocate for more robust wealth redistribution policies to address these disparities.
• Need

o Wealth Disparity: The wealth gap has widened in India in the recent years.

o Statistics: According to a study published by The World Inequality Lab, the richest 1% of Indians now own as much as 40% of the country’s wealth.

o Proposed Solutions: Policy proposals include implementing a super tax on billionaires and millionaires, along with taxing the wealth of the rich, not just their income.

o Fair Share of Taxes: Experts stress the necessity of ensuring wealthy individuals contribute their fair share of taxes, highlighting the current inequities in the tax system.