Why in the news? 

Recently Oxfam released report titled 'Takers Not Makers: The Unjust Poverty and Unearned Wealth of Colonial Inheritance'. 

Key Findings of Report

• Deeply Unequal World: Today, 44% of the world's population lives below the World Bank's poverty line of $6.85 (PPP). Meanwhile, the richest 1% control 45% of global wealth.
  • Age of billionaire colonialism: In 2024, billionaires' wealth increased by a rate three times faster than 2023.
  • Most billionaire wealth is taken, not earned: 60% of billionaire wealth comes from inheritance, cronyism and corruption or monopoly power.
• Colonial Inheritance: Unearned nature of much of extreme wealth of ultra-rich is arguably a result of colonialism which is both a historical and a modern-day phenomenon.  
  • Historical colonialism: It is the period of formal occupation and domination by rich countries that largely came to an end with the national liberation struggles waged in the decades after World War II. 
  • Modern-day Colonialism (Neo-colonialism): Predominantly the rich countries of the Global North continue to exercise power and control over the countries of the Global South. Colonial Legacy in Contemporary Times 
    • Digital colonialism: By controlling digital ecosystem, Big Tech corporations from north control computer-mediated experiences, giving them direct power over political, economic and cultural domains of life.
    • Exploitative corporate structures: Multinational corporations (MNCs) of Global North dominate global supply chains, benefitting from cheap labour and the continued extraction of resources from the Global South. 
      • Between 1995 and 2015, US$242 trillion (in 2010 US$) was extracted by the Global North in this way.
    • Unequal power in institutions that govern our world: Global governance institutions are informally dominated by Global North.
      • E.g., G7 countries still hold 41% of the votes in the IMF and World Bank, despite having less than 10% of the world's population
• Impact of Historical Colonialism on Present-day Inequality:
  • Exploitation and Profound economic Inequality, Border Conflicts due to arbitrary colonial partitions etc. 
    • Lower-income countries' tax losses (US$47bn) due to global tax abuse are equivalent to half (49%) of their public health budgets. 
    • Low- and middle-income countries spend 48% of their budgets on debt repayment, mostly to wealthy creditors north.
  • Social Divisions (E.g. Racism), concentration of landholdings in the Global South, Poor health Indicators in global south, global disparities in research and funding etc.
  • Gender Inequality: Colonialism disrupted traditional gender roles, diminishing women's economic autonomy. 
    • The introduction of cash crops marginalized women's agricultural contributions, relegating them to unpaid labor and excluding them from the global marketplace.

Economic Inequality in India 

• Wealth Inequality: In India, the richest 1% control more than 40% of total wealth, while the bottom 50% own merely 3% (Oxfam's Report - Survival of the Richest: The India Story)
• Income Inequality: 
  • Rural-Urban Divide: Average Monthly Per Capita Expenditure (MPCE) is Estimated Rs. 4, 122 (Rural) and Rs. 6,996 (Urban) (Household Consumption Expenditure Survey 2023-24).
  • Gender Pay Gap: In India, men earn 82 % of the labour income, whereas women earn 18 % of it (World Inequality Report 2022).
• Wealth Drain during Colonial Period: Between 1765 and 1900, UK drained $64.82 trillion from India, with $33.8 trillion going to the top 10%.

Way Forward (Recommendations of the report)    

• National Targets: All Countries should establish National Inequality Reduction Plans with specific timelines to decrease economic disparities.
  • Formerly colonized countries should work to reform or remove inherited institutions that have a colonial history and perpetuate inequality.
• Reformation of Global Governance: Changing voting powers in institutions like World Bank and IMF, allowing Global South countries more influence over policies that directly affect them.
  • The IMF & World Bank should avoid imposing economic conditions based on fiscal consolidation, or deregulation when issuing loans and grants.
• Abolition of UN Security Council Veto Power & restructuring its membership: To include permanent seats for Global South nations can promote equity.
• Taxation of the Super-Rich: Governments need to implement reforms to tax the income and wealth of ultra-rich individuals.
  • It's essential to tackle tax avoidance and evasion, and eliminate tax havens that enable elites and large corporations to evade taxes.
• Dismantling Monopolies: Breaking up private monopolies and regulating corporations ensures they pay living wages and commit to climate and gender justice. 
  • Democratization of Knowledge (ending monopolies over knowledge) by reforming trade and patent rules, such as those exploited by Big Pharma, can reduce inequality.
• Promotion of Global South-South Cooperation: Countries should foster collective development in Global South nations by sharing knowledge, technology, and resources.
  • Strengthening Global South Institutions enables these countries to play a more active role in implementing policies aimed at reducing inequality.
• Former colonial powers should pay reparations and support the cancellation of unsustainable debt, actively working to dismantle the Global North's dominance of the global economy.