Inequality has many shades in the world, but income inequality has been the most prominent nowadays. Just eight men own the same amount of wealth as the 3.6 billion people who make up the poorest half of the world, says a new Oxfam report.
Oxfam’s recent report ‘An economy for the 99%’ highlights how the gap between the rich and poor is widening at a dangerous pace. Over the next 20 years, 500 people will pass over $2.1 trillion of wealth to their heirs, which is a sum larger than the GDP of India, CatchNews reported.
They reported too that the richest man in Vietnam earns more in one day than the worst-paid worker earns in ten years. And that one in nine people on the planet go to bed hungry each night.
New research reveals how skewed the global distribution of wealth is, especially in India. India happens to be one of the most unequal countries in the world with a very high and sharply rising concentration of income and wealth. In this country, the richest 1% of population owns 58% of its total wealth. If that’s not shocking enough, here’s more: 57 billionaires have the same amount of wealth as the bottom 70% of India.
“We need to create a more human economy in India. The Indian government or the civil society cannot be expected to fight inequality alone. The role of the private sector becomes questionable in the context of rising inequality,” the report says.
The private sector has an equally important role in promoting responsible business and creating equal opportunities for all. Here are four ways how good businesses can fight the rising inequality:
Pay Fair Taxes
In India, it is no secret that companies evade taxes in various ways, especially by using tax havens. Tax evasion is not only a crime, but it essentially robs the poorest people from the public services they need the most.
Big companies receive many tax incentives in India. India has lost an alarming amount of over Rs 620 billion ($9.28 billion) in tax incentives to corporates. On top of that, there are over 50,000 profitable Indian companies, which do not pay any tax. Although the Indian tax structure looks reasonably progressive on paper, these figures show that in practice much of the tax is neither paid, nor collected.
It is well known now that Indian companies have used tax havens abroad in small countries like Mauritius and Cyprus. The Panama Papers have proved that some Indian nationals and companies have been dodging taxes for years.
Responsibility
India has created business responsibility frameworks for its private sector, in the form of National Voluntary Guidelines. The ministry of corporate affairs set up these guidelines in 2011. Soon after, Securities and Exchange Board of India mandated the top 100 listed companies to report on NVGs annually.
The analysis done by India Responsible Business Forum for the India Responsible Business Index in 2016 revealed that several companies have made incomplete disclosures about their Corporate Special Responsibility policies and expenditure.
Supply Chain
Lack of clarity in a company’s supply chain puts it at a huge risk, apart from adversely affecting the economy and society. Non-transparent supply chains violate human rights in the form of low wages, poor working conditions, gender and caste-based discrimination, child labor, etc.
In India, more than 90% of the people are employed in the informal sector. Despite being undervalued and largely unrecognized, the informal sector continues to support large companies. An analysis of the CSR policies of the top 100 companies in India showed that the policies they have in place for their supply chain are insufficient and not up to the mark.
Ending Inequality
In India, it is mandatory for companies with a minimum turnover and profits to spend 2% of their average profit for the last three years on corporate social responsibility. Although spending just 2% on CSR activities is just a small step, the private sector can fully utilize this law as chance to fight inequality. To make this happen, a good business needs clear and focused CSR policies.
The private sector, government and civil society need to come together and make a collaborative effort to fight inequality. Companies need to create and test new business models with the help of NGOs. The government can play its part by creating a strong regulatory system.
A good business works not just for its own profit, but also for everyone’s benefit. It empowers those who help create it—labor, consumers, suppliers and local communities.
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