'Economy will come to a halt': Economist Gautam Sen on wealth redistribution debate

‘Economy will come to a halt’: Economist Gautam Sen on wealth redistribution debate

Economist Gautam Sen that the redistribution of wealth as a plan would be hard to implement in India and would not see much success. He said that implementing this would bring the economy to a halt, and said that he can’t see this happening in a country like India.

In an interview to news agency ANI, political economist and author Gautam Sen said that practical implementation of a wealth redistribution policy would be highly challenging. “As I said, only about 12 crore people have wealth in the excess of Rs 102 crore each. But almost all of these have invested in their businesses. So, you will have to liquidate their businesses in order to take away their wealth,” he said. He pointed out that local stores, repair shops and so only would only be worth Rs 3-5 crore each.

“All of these people will have to surrender everything they have. Now, the economy will come to a halt. But even if that were not the case, consider the biggest single employer outside agriculture in India is small and medium industry. These people have one big problem in India that the government is trying to solve, which is they have a cash flow problem. They receive their income in the future and to pay their expenses up front. These people will try to find as much as they can from their cash flow to meet the demands of an inheritance tax, which means they really will not be able to operate at all. But even that will not be enough,” said the economist, adding that the tax generated from “anybody who has something”, which would be less than 1.5 per cent of the population, would still be not enough to make the rest of 98-99 per cent better off.

Sen, a former member of the Indo-UK Roundtable and Senior Consultant at UNDP, and who retired from the London School of Economics, added that, moreover, this survey would need to be done every two years, and pointed out that this would not be a practical way.

The economist said that India has seen better redistribution in the last 10 years from growth from real goods like road networks, water, toilets, healthcare, and subsidised gas.

Gautam Sen lauded the Modi government for improving welfare for the poor. He said that the progress is going to be slow because a country cannot suddenly have 15 per cent growth. “But if we achieve 8 per cent growth you will see a massive difference in 10 years in the welfare of the poor people,” he said.

Also speaking on the inheritance tax debate, kickstarted by Congress’ Sam Pitroda’s example of the US tax system, Sen said that the very rich like the Ambanis, Adanis, Mahindras, and Tatas would emigrate from India to Dubai because they don’t have any income tax. It will be a huge loss of wealth for India, he said.

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