1. Consider income-based reservations in India: Thomas Piketty

Consider income-based reservations in India: Thomas Piketty

French economist Thomas Piketty, who wrote Capital in the 21st Century, which looks at wealth concentration and distribution since the 1700s, suggested that India should consider income-based reservations to tackle inequality.

By: | Mumbai | Published: December 6, 2015 7:10 AM
Thomas Piketty

Thomas Piketty also lamented the lack of official, detailed income statistics in India. (Reuters)

French economist Thomas Piketty, who wrote Capital in the 21st Century, which looks at wealth concentration and distribution since the 1700s, suggested that India should consider income-based reservations to tackle inequality.

“A big advantage of income and wealth is that it is more universal, more continuous,” said Piketty while delivering a lecture: ‘Is India the most unequal country on earth?’ at the Times LitFest here on Saturday.

He, however, acknowledged that it was not an easy task and could take a long time. “I am not saying caste-based reservation system should be replaced right away by an income-based reservation system but you know I think this could be one possible evolution in the long run,” said Piketty. “Of course this could take time. I am not saying you can replace entirely caste by income because of you have (a lot of) discrimination (here) based on origin or caste, but I think over time and in the longer run…. think of other ways to have positive discrimination.”

“At least India is trying to address the problem,” said Piketty adding that many other countries were ignoring it claiming that they are meritocracies.

Thomas Piketty also lamented the lack of official, detailed income statistics in India. He said it was paradoxical that in the age of big data and improved access to information, India is a “unique case in history of a decline in quality of available income tax statistics.”

He added that official numbers tend to underestimate inequality, particularly in India because most of the time they are based on consumption rather than income and they are based on self-reported survey information rather than administrative, fiscal information.
He said that India previously published such data till the year 2000 and his work with Abhijit Banerjee showed that the inequality figure was much larger than official surveys. But that data is not available anymore. What India has is “very basic elementary data on the number of tax payers by income brackets but companies and individuals are grouped together — which makes no sense,” said Piketty
“So I am not able to (tell) you much about comparison with other countries because the data is not there,” he added.

“Access to good information is not only to make academics happy, but it is important for society as a whole in particular,” he said.

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