Mr. Khan. In 2006, 53% India's wealth was owned by the Top 10% of its population, whereas the Bottom 50% had a share of just 8% (Source:
BBC NEWS | South Asia | Key facts: India rising). The gap is expected to widen further, with nearly 60% of India's wealth to be owned by the Top 10% of its population in the near future. Therefore, there is no doubt that India is currently following the pre-Revolution French model (maybe inadvertently), where the Aristocracy (modern day Elites) depend on the peasants (the lower class, or the bottom 50%) and the noblemen (the middle class, approximately 25% of India) heavily, but must keep them down in the gutters. Hence, politics come into play, carrot and stick tactics come into play, and so on.
We all know how that model ended up. The poor can not and will not see the rich get richer for too long, and this is true for any country, not just India. If this really is the model India plans to continue, it doesn't bode well for them. Countries around the world strive to, sometimes,
slow down their growth so as not to sideline a huge chunk of their population.
For example, it is not in Canada's best interests to spend a lot of money on the Oil Sands in Alberta while ignoring the needs of the rest of the country, despite the fact that the Oil Sands are the greatest natural resource Canada possesses after fresh water and timber (neither one of which can be sold for the same value as Oil). Canada wants to grow in that sector, but in a controlled way. Their approach is, hence, the opposite as that of India.
Now, compare India's wealth distribution to Pakistan's wealth distribution, which is much more uniform and by far the better way to go in the opinion of most economists. For Pakistan, the Top 10% own 27.6% of the wealth, whereas the Bottom 50% own 26.5%. The middle-class, therefore, owns between 40% to 50% f the national wealth (Source:
Pakistan Poverty and wealth, Information about Poverty and wealth in Pakistan)
Polarization is not a good tactic. India currently relies heavily on cheap labor for its growth, and therefore, for it to continue its growth, it must keep providing the international community with cheap labor (technical and non-technical). It is in the interest of the Top 10% of India to keep the gap with the Bottom 50% as wide as possible for as long as possible, because it provides them with greater opportunities.
Here's what I mean. For common Indian to start benefiting from this growth, the wages must go up and so must the quality of life. This, in turn, will increase the cost to do business, and deplete the cheap labor, thus making India a
less desirable place to do business. This cycle feeds on itself. Not to mention that increased polarization will compound India's political, ideological, ethnic and secessionist problems.
Now, let's come to my preference. I would prefer a slow, gradual growth spread out over many decades, rather than an inflating bubble that could burst (Dubai) or unhealthy growth resulting in polarization (India) or even growth only at the governmental level rather than the population (China). I prefer the post-World War II Japan model. It's brought them far, and made their society stronger rather than weaker.
