inequality in thailand essay

TDRI: Thailand Development Research Institute

Thai inequality: What we should know

  Somchai Jitsuchon

One reason for optimism over inequality in Thailand is that awareness of the problem is far higher these days. And not only in Thailand: the whole world now pays serious attention to the issue as a fundamental problem afflicting modern mankind.

Inequality is more than a money matter. Inequality is unethical. It crushes the basic principle that every person should have equal opportunities. It is also the root cause of many structural problems in Thai society. The lack of social and political stability, the low quality of democracy, the flesh trade and human trafficking, crime, corruption … you name it. These social evils are different manifestations of structural problems that share the same root cause – inequality.

The growing awareness of that fact is encouraging. But awareness alone is not enough. We need to go beyond passive acknowledgment, old debates, and piecemeal policies, to push for structural change.

If we want to make our society fair, equal, democratic, innovative and safe, we need to tackle inequality by making sure that every person – regardless of gender, race or belief – has equal access to life opportunities and justice.

Doing so first requires that “we know what we should know” about inequality, which is the focus of this article. In the article that will follow, I will turn to “we do what we should do”.

We have known for a long time that inequality manifests in many forms, including geographical disparity and social exclusion of marginalised people such as the stateless, migrant and domestic workers.

As to the causes of inequality, the familiar ones range from intergenerational inequality when rich-poor gaps transmit from generation to generation, disparity in education in both quality and the level completed, unequal access both to credit and the skills necessary for a modern economy, and legal discrimination.

Social connectedness (“who you know”) is another factor determining unequal outcomes both economically and politically.

All this is “old knowledge”. We have known it for ages and yet knowing it does not seem to enable us to reduce or prevent inequality from rising. We have to admit that our knowledge of inequality is insufficient. So what more is there to know? I think there are at least six things we should know better about inequality in Thailand.

First, we need to admit that Thailand is among the 10 most unequal countries on this planet for wealth distribution. It is reasonable to think that there must be more structural problems behind the above-mentioned usual causes of inequality. I believe these problems lie in our social and political system. Many research studies have pointed to this aberration. They reveal the country’s extreme concentration of economic power controlled by a handful of billionaires, declining competitiveness in the private sector, and worsening corruption. Corruption has become commonplace, and very easy to conduct, most notably by the well-connected higher strata of society. This way of accumulating wealth deepens inequality even further.

Second, while the gaps between Thais in accessing “basic” social services such as education and healthcare narrow, the gaps in accessing “high quality” services are widening. For example, children from wealthy families have more opportunities to enter prestige universities and gain higher knowledge and skills. Richer Thais have more access to premium healthcare services, and live longer. Evidence abounds that gaps between the very wealthy and the middle class and lower strata in society are growing ever wider.

Third, we should be aware that Thailand may now host a substantial number of the chronically poor. I began to suspect this after seeing increases in the poverty rate in 2016 and 2018 despite considerable economic growth of over 3-4%. If this is true, as much as 10% of the population may have fallen into chronic poverty, which would make tackling inequality even more difficult.

Fourth, disruptive technology may be very harmful and worsen inequality more than did any past technological breakthrough.

Fifth, many countries in Europe with low inequality have won admiration from Thais. Yet few know that the use of fiscal policy to provide universal social welfare benefits across the board is the main reason for their equitable societies. This ignorance has resulted in resistance to universal welfare among many Thais.

In low-inequality countries, welfare benefits are not considered charity but a legal right. Everyone in the country is entitled to that same right. Every child has the same access to free quality education to high school level at a minimum, with the aim of helping everyone to realise their full potential. The universal welfare benefits cover sickness, unemployment, and disabilities. Such thorough benefits provide equal opportunities and strong social safety nets for all, so people do not have to fear the uncertainties that life may bring. Such life security is good for business too. Entrepreneurs can focus solely on managing business risks as their lives are already protected by the comprehensive social welfare system. That can bring more investment, including highquality small and medium-sized enterprises (SMEs), which in turn can help make universal welfare affordable.

Sixth, lack of cash is not just a definition of poverty, it is a major constraint in itself. Policymakers need to realise this fact to form effective poverty alleviation measures. If the poor receive money or other forms of financial aid regularly and sufficiently, they can use the cash to break the chains and rise above poverty by themselves. For example, they can use the money directly to improve their skills and knowledge or to invest in their businesses.

A level playing field, comprehensive welfare services for life security across the board, and investment in human capital without discrimination are the key solutions.

Thailand needs to make this happen if we want to eradicate inequality. When that happens, an open society and democracy are not far behind.

Somchai Jitsuchon, PhD, is research director for Inclusive Development Policy at the Thailand Development Research Institute (TDRI). Policy analyses from the TDRI appear in the Bangkok Post on alternate Wednesdays.

Related Article: Thai inequality 2020 (2): What we should do

First Published: Bangkok Post on January 22, 2020

Reducing poverty and improving equity in Thailand: Why it still matters

Like many other countries in the East Asia Pacific, Thailand has been enormously successful in reducing poverty over the last few decades. In 2017, the extreme poverty rate in Thailand was only 0.03% and the number of extreme poor now measures in the thousands. Compared to other countries, this sounds pretty good. The reality is, recent droughts and economic downturns have pointed to vulnerabilities in Thailand, as poverty increased in 2016 during a particularly poor agricultural year. With a rapidly aging population, a conflict-affected Southern region, and one-third of the labor force still employed in low-productivity agriculture, poverty and equity remain relevant topics for this upper-middle-income country.  Based on recent analysis done by the World Bank Thailand Poverty and Equity team, we’ve picked out seven statistics in time for End Poverty Day 2019 that clearly demonstrate why Thailand still needs to focus on reducing poverty and improving equity.  1. The International Poverty Line threshold of $1.90/day converts to about 26 baht/person per day In 2017, the extreme poverty rate in Thailand based on the International Poverty Line was 0.03%. If one converts the International Poverty Line to local Thai baht, the value is very low at about 26 baht/person per day, which is inconceivable for many Thais to be sufficient for an acceptable life. Monitoring poverty at higher poverty lines is increasingly important as countries grow richer. A poverty line that is too low can lead to an inaccurate assessment of an individual’s ability to function in society in a socially acceptable manner. If we use the upper-middle-income poverty line of $5.50/day or 75.7 baht, the poverty rate increases to almost 8%, which is more in line with Thailand’s national estimate.    2. Thailand’s national poverty rate increased in 2016, the fourth time since 1988. Since the late 1980s, when the Office of the National Economic and Social Development Council (NESDC) began publishing national poverty rates, official poverty rates measured by the government of Thailand increased in only four instances. Three of these instances coincided with financial crises (1998, 2000, and 2008). The fourth and most recent increase in poverty occurred in 2016. The increase in poverty from 2015 to 2016 was small, about 1.5 percentage points based on national estimates by the government of Thailand, as well as the global upper-middle income poverty line. While nationally, the increase is small, there are larger changes by regions (see #3 and #4 below).

3. The growth of the bottom 40% was negative from 2015-2017 and uneven across regions Related to an increase in poverty, the bottom 40% of the population saw their average household consumption and incomes decline from 2015-2017.  Growth across regions is uneven. Bangkok and Central areas typically enjoy the highest growth, and the difference among other regions can be quite large. From 2011-2013, annual growth at the mean was about 3.8%. During this same period, Bangkok averaged annual growth rates well above 10% per year, while the North, Northeast and South regions experienced growth below 5%.  Between 2015-2017, Thailand saw a much slower growth period. While household consumption growth was still present, income growth was almost erased. The fall in agricultural prices and negative impacts on farmers was expected, though broad declines in household income was seen in other regions as well.

4. While the increase in national poverty was small, increases were higher in some regions By official measures, poverty is the highest in the Southern region. Between 2015-2017, poverty also increased the most in this region in percentage point terms. The official poverty rate was 9.9% in 2015 and 11.8% in 2017 in the Southern region, an increase of almost 2 percentage points.

5. The two poorest provinces in Thailand are in conflict-affected areas in the Southern region. While poor households are likely to be in agriculture, the profile of the poor is not one-dimensional. Tackling poverty in Thailand will also mean focusing on ethnic minorities, lagging regions in mountainous and border areas, conflict, and fragility. The two poorest provinces are Pattani and Narathiwat, neighboring provinces in the conflict-affected Southern region with poverty rates of 34.2% and 34.17% respectively. 

6. The pace of poverty reduction has been the fastest in Bangkok

By region, Bangkok has enjoyed the fastest pace of poverty reduction. Since 1988, the annualized change in poverty reduction in Bangkok has been about 10% per year; its official poverty rate dropped from 24.7% in 1988 to 1.1% in 2017. The Central region had the second fastest pace of poverty reduction. Higher levels of development and rates of growth are typically seen in Bangkok and Central regions where most of the country’s high-valued production in manufacturing and services is located. 

The North, Northeast, and South regions experienced the slowest pace of poverty reduction. These regions are poorer, fragile, less diversified, and more reliant on agriculture. Agricultural regions are also sensitive to changes in commodity prices and natural disasters including droughts and floods.

7. Perceptions about living standards in Thailand worsened, coinciding with the recent increase in poverty Starting in 2016, there was a downturn in perceptions among those surveyed in a Gallup World Poll. Perceptions worsened in some questions related to their life, financial well-being, standards of living, and income.  For example, starting in 2016, many more respondents began indicating that they did not have enough money for food or shelter at least once in the last year.  

These seven statistics demonstrate that there are still poverty and equity related challenges in Thailand. Even though Thailand is now an upper-middle income country that has nearly eradicated extreme poverty, data show that poverty reduction has slowed down and have been uneven across the country. Stay tuned as the full report on Poverty in Thailand will be published in 2020!

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Focus on Skills, Education, Regional Development Needed to Create a More Equal Society in Thailand

Progress in Reducing Income Inequality Has Slowed

BANGKOK, November 29, 2023 – Thailand can narrow relatively high levels of income inequality by boosting worker skills, revising education to emphasize digital ability, increasing female labor force participation, and raising agricultural productivity, a World Bank report released today said.

Thailand has made significant progress in reducing gaps between the wealthiest and the poorest since the early 2000s, but progress has slowed since 2015, according to “ Bridging the Gap: Inequality and Jobs in Thailand .”  In 2021, Thailand had an income Gini coefficient – a standard measure of income inequality -- of 43.3%, the highest level of income-based inequality in the East Asia and Pacific region. The concentration of income in the wealthiest households is particularly high: in 2021, the richest 10% of Thais held over half of the country's income and wealth.

Differences in educational opportunities and skills, low farm incomes, an aging population, and increasing household debt pose challenges to lowering inequality in Thailand. Although COVID-19’s effect on poverty and inequality was relatively mild, the pandemic may have exacerbated the existing gap in learning outcomes and household debt challenges. Thailand’s rising cost of living and shrinking working-age population share are additional factors complicating efforts to reduce inequality.

“We see in this report that inequality in Thailand begins very early in life, with unequal opportunities in human development, which perpetuates over the life cycle and across generations," said World Bank Country Manager for Thailand Fabrizio Zarcone . "Policies are needed in the short term to address learning losses and the rising prices of necessities, which could both widen human capital gaps. We need to ensure policies can provide vulnerable groups with enough support to increase their resilience as challenges from rising inflation and climate events mount.”

Income disparities between regions and between communities within regions contribute to overall inequality in Thailand. In 2020, the average income in Bangkok, which has the country’s highest regional GDP per capita, was more than 6.5 times that of the northeast region, which has the lowest GDP per capita. The concentration of economic growth in Bangkok has amplified regional disparities in Thailand, emphasizing the need for balanced regional development.

Educational gaps and occupational differences are the largest drivers of income inequality in Thailand. Attendance is nearly universal at lower levels of education but falls off by upper secondary school. Approximately 8% of girls aged 15-17 do not attend school, a figure that soars to 17% among boys.

The challenges of distance learning during the pandemic fell hardest on students in Thailand's poorer households. The pandemic is estimated to have widened the learning gap—the difference between the expected years of school and the learning-adjusted years of school—from 3.7 to 4 years, further aggravating the country’s already-low learning outcomes, particularly among low-income families. With this, the Human Capital Index – a World Bank metric of the contribution of health and education to the productivity of individuals and countries - is estimated to have declined in Thailand from 0.61 in 2020 to 0.55 in 2022.

COVID-19 also exacerbated household debt challenges, contributing to the wealth gap. The overall rate of indebted households in Thailand increased from 45.2% to 51.5% between 2019 and 2021 as households borrowed to compensate for income losses.

“Thailand can leverage the crisis generated by the pandemic to promote necessary reforms and create a more equal and inclusive society," said World Bank Poverty Economist Nadia Belhaj Hassine Belghith, who led the study. “In particular, Thailand needs to support schools in assessing student learning and provide learning recovery programs. Strengthening social protection programs and providing well-targeted assistance, will enhance the ability of existing transfers to benefit poorer households.”

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Inequality, the biggest issue

Sansiri CEO Srettha Thavisin shares ways to bolster the economic recovery

PUBLISHED : 11 Aug 2021 at 04:30

NEWSPAPER SECTION: News

WRITER: Post Reporters

Inequality will become a key post-Covid-19 problem and addressing the issue must be put on the national agenda, Srettha Thavisin, CEO and president of SET-listed Sansiri Plc says.

He also suggests seven ways to bolster the economic recovery and help the country move forward.

Mr Srettha says the economic slowdown due to the Covid-19 pandemic has been widening the income gap between the rich and poor that is becoming harder to fix.

"Consequential to the gap is that social and economic equality will become harder to achieve," he noted.

Capital injection measures which all countries have adopted are short-term for dealing with hardship among people but such measures are not the answer to solve inequality, he said.

For example, the US launched the American Rescue Plan Act, the biggest economic stimulus package in US history worth US$2.2 trillion (73.6 trillion baht) this year.

As it turns out, the rich, who account for 1% of the population in the US have become even richer, with a total net worth of $4.8 trillion, a vast gap is separating them from the 80% of the population at the base of the income pyramid.

The situation in Thailand is no different, with the Covid-19 crisis widening the income gap and creating more inequality.

Accessibility of quality vaccines and fast treatment is crucial for the time being.

He said the recovery of the Thai economy depends on the accessibility of vaccines.

"Nothing is more important than efficient vaccines for Covid-19, including the booster shot.

Just like other kinds of flu, injections may even be required annually, and therefore endorsement funds for the issue is crucial," Mr Srettha said.

Besides addressing inequality, which needs to become part of the national agenda, Mr Srettha suggested seven ways to boost the economic recovery.

Investment in megaprojects: Massive investment would allow efficient financial circulation for society overall, especially for SMEs and tourism. Foremost to Thai investment is funding.

Currently, the government has borrowed 1.5 trillion baht for handling the Covid-19 crisis. It needs additional loans to finance investments and the government should seek a legal adjustment to expand the public debt ceiling to more than 60% of GDP.

Tax restructuring: To find a better balance in economic inequality and increase the government's income, a wealth tax should be reconsidered as it would allow money to be collected from the high-income group.

Price support for agricultural products: By increasing the price of agricultural products, farmers, a vast group of people will become more able to support themselves.

Solving the problems of Thai Airways International and other airlines: As Thai GDP relies heavily on tourism, the airline business must be further assisted during this difficult time.

THAI's debt and organisation restructuring must be completed with transparency as soon as possible.

Policies to attract investors: Policies and incentives to attract more tourists should therefore be formulated.

Constitutional amendment: This would restore political confidence and stability and reduce internal conflict that is currently hindering economic growth.

For Sansiri itself, Mr Srettha said the company has allocated 100 million baht to help small businesses through its "No One Left Behind" campaign in the hope of narrowing the economic gap and helping the country through the pandemic.

"Sansiri is viewing this pandemic as a national agenda issue to begin with. We are aware of the help potential from bigger businesses and the immediate needs of smaller entrepreneurs.

"Our aim is to simultaneously reduce the social and economic gap brought about by the outbreak," concluded Mr Srettha.

"We hope that our No One Left Behind mission will carry the country out of this crisis stronger as a whole," he said.

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Source: Emmanuel Saez and Gabriel Zucman • Note: Tax rates shown include levies paid at all levels of government. Government transfers such as Social Security benefits have not been subtracted.

In the 1960s, the 400 richest Americans paid more than half of their income in taxes. Higher tax rates for the wealthy kept inequality in check and helped fund the creation of social safety nets like Medicare, Medicaid and food stamps.

Today, the superrich control a greater share of America’s wealth than during the Gilded Age of Carnegies and Rockefellers. That's partly because taxes on the wealthy have cratered. In 2018, America's top billionaires paid just 23 percent of their income in taxes.

For the first time in the history of the United States, billionaires had a lower effective tax rate than working-class Americans.

Guest Essay

It’s Time to Tax the Billionaires

By Gabriel Zucman

Gabriel Zucman is an economist at the Paris School of Economics and the University of California, Berkeley.

Until recently, it was hard to know just how good the superrich are at avoiding taxes. Public statistics are oddly quiet about their contributions to government coffers, a topic of legitimate interest in democratic societies.

Over the past few years, I and other scholars have published studies and books attempting to fix that problem. While we still have data for only a handful of countries, we’ve found that the ultrawealthy consistently avoid paying their fair share in taxes. In the Netherlands, for instance, the average taxpayer in 2016 gave 45 percent of earnings to the government, while billionaires paid just 17 percent.

Billionaires avoid taxes outside

the United States, too

United States

Netherlands

Lower earners

0-50th percentile

Middle earners

51-90th percentile

High earners

90-99.99th percentile

Billionaires

Billionaires avoid taxes outside the United States, too

50% total tax rate

Sources: Demetrio Guzzardi, et al., Journal of the European Economic Association; Emmanuel Saez and Gabriel Zucman; Institut des Politiques Publiques; Netherlands Bureau for Economic Policy Analysis

Note: Data is from 2015 for Italy; 2016 for the Netherlands and France; 2018 for the United States.

Why do the world’s most fortunate people pay among the least in taxes, relative to the amount of money they make?

The simple answer is that while most of us live off our salaries, tycoons like Jeff Bezos live off their wealth. In 2019, when Mr. Bezos was still Amazon’s chief executive, he took home an annual salary of just $81,840 . But he owns roughly 10 percent of the company , which made a profit of $30 billion in 2023.

If Amazon gave its profits back to shareholders as dividends, which are subject to income tax, Mr. Bezos would face a hefty tax bill. But Amazon does not pay dividends to its shareholders. Neither does Berkshire Hathaway or Tesla. Instead, the companies keep their profits and reinvest them, making their shareholders even wealthier.

Unless Mr. Bezos, Warren Buffett or Elon Musk sell their stock, their taxable income is relatively minuscule. But they can still make eye-popping purchases by borrowing against their assets. Mr. Musk, for example, used his shares in Tesla as collateral to rustle up around $13 billion in tax-free loans to put toward his acquisition of Twitter.

Jeff Bezos arriving for a news conference after flying into space in the Blue Origin New Shepard rocket on July 20, 2021.

Getty Images

Outside the United States, avoiding taxation can be even easier.

Take Bernard Arnault, the wealthiest person in the world. Mr. Arnault’s shares in LVMH, the luxury goods conglomerate, officially belong to holding companies that he controls. In 2023, Mr. Arnault’s holdings received about $3 billion in dividends from LVMH. France — like other European countries — barely taxes these dividends, because on paper they are received by companies. Yet Mr. Arnault can spend the money almost as if it were deposited directly into his bank account, so long as he works through other incorporated entities — on philanthropy , for instance, or to keep his megayacht afloat or to buy more companies .

Historically, the rich had to pay hefty taxes on corporate profits, the main source of their income. And the wealth they passed on to their heirs was subject to the estate tax. But both taxes have been gutted in recent decades. In 2018, the United States cut its maximum corporate tax rate to 21 percent from 35 percent. And the estate tax has almost disappeared in America. Relative to the wealth of U.S. households, it generates only a quarter of the tax revenues it raised in the 1970s.

The falling U.S. corporate tax rate

Reagan tax cuts

Trump tax cuts

Source: Internal Revenue Service

Note: Tax rates are for each year’s highest corporate income bracket.

So what should be done?

One obstacle to taxing the very rich is the risk they may move to low-tax countries. In Europe, some billionaires who built their fortune in France, Sweden or Germany have established residency in Switzerland , where they pay a fraction of what they would owe in their home country. Although few of the ultrawealthy actually move their homes , the possibility that they might has been a boogeyman for would-be tax reformers.

There is a way to make tax dodging less attractive: a global minimum tax. In 2021, more than 130 countries agreed to apply a minimum tax rate of 15 percent on the profits of large multinational companies. So no matter where a company parks its profits, it still has to pay at least a baseline amount of tax under the agreement.

In February, I was invited to a meeting of Group of 20 finance ministers to present a proposal for another coordinated minimum tax — this one not on corporations, but on billionaires. The idea is simple. Let’s agree that billionaires should pay income taxes equivalent to a small portion — say, 2 percent — of their wealth each year. Someone like Bernard Arnault, who is worth about $210 billion, would have to pay an additional tax equal to roughly $4.2 billion if he pays no income tax. In total, the proposal would allow countries to collect an estimated $250 billion in additional tax revenue per year, which is even more than what the global minimum tax on corporations is expected to add.

Bernard Arnault watching the men’s singles final at the French Open on June 8, 2014.

Abaca Press

Critics might say that this is a wealth tax, the constitutionality of which is debated in the United States. In reality, the proposal stays firmly in the realm of income taxation. Billionaires who already pay the baseline amount of income tax would have no extra tax to pay. The goal is that only those who dial down their income to dodge the income tax would be affected.

Critics also claim that a minimum tax would be too hard to apply because wealth is difficult to value. This fear is overblown. According to my research, about 60 percent of U.S. billionaires’ wealth is in stocks of publicly traded companies. The rest is mostly ownership stakes in private businesses, which can be assigned a monetary value by looking at how the market values similar firms.

One challenge to making a minimum tax work is ensuring broad participation. In the multinational minimum tax agreement, participating countries are allowed to overtax companies from nations that haven’t signed on. This incentivizes every country to join the agreement. The same mechanism should be used for billionaires. For example, if Switzerland refuses to tax the superrich who live there, other countries could tax them on its behalf.

We are already seeing some movement on the issue. Countries such as Brazil, which is chairing the Group of 20 summit this year and has shown extraordinary leadership on the issue, and France , Germany, South Africa and Spain have recently expressed support for a minimum tax on billionaires. In the United States, President Biden has proposed a billionaire tax that shares the same objectives.

To be clear, this proposal wouldn’t increase taxes for doctors, lawyers, small-business owners or the rest of the world’s upper middle class. I’m talking about asking a very small number of stratospherically wealthy individuals — about 3,000 people — to give a relatively tiny bit of their profits back to the governments that fund their employees’ educations and health care and allow their businesses to operate and thrive.

The idea that billionaires should pay a minimum amount of income tax is not a radical idea. What is radical is continuing to allow the wealthiest people in the world to pay a smaller percentage in income tax than nearly everybody else. In liberal democracies, a wave of political sentiment is building, focused on rooting out the inequality that corrodes societies. A coordinated minimum tax on the superrich will not fix capitalism. But it is a necessary first step.

More on tax evasion and inequality

This Is Tax Evasion, Plain and Simple

By Gabriel Zucman and Gus Wezerek

The Tax Pirates Are Us

By Binyamin Appelbaum

How to Tax Our Way Back to Justice

By Emmanuel Saez and Gabriel Zucman

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips . And here’s our email: [email protected] .

Follow the New York Times Opinion section on Facebook , Instagram , TikTok , WhatsApp , X and Threads .

Gabriel Zucman is an economist at the Paris School of Economics and the University of California, Berkeley, and a co-author of “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay.”

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Myths and Facts about Inequalities in Thailand

This paper analyzes inequalities in Thailand over the past three decades and the implications of Covid-19 on existing inequalities. We show that while total income and consumption inequalities in Thailand have been declining, it raises concerns regarding some drivers behind the declining trends. First, the decline in income inequality among the older households is largely driven by private transfers. Given Thailand' s demographic transformation into aging society, this channel is not sustainable. Second, despite the increasing longevity trend, household heads aged 55-69 years old have become inactive in the labor markets over the years. Among active households, the earnings inequality among households who mainly earn from farming activities has risen. However, such increase was masked at the aggregate level because of the higher shares of households working in non-farm sectors and the decline in their earnings inequality. Third, while consumption inequality has fallen similarly ...

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This paper makes use of tax–benefit microsimulation techniques to quantify the distributional effects of COVID-19 in Ecuador and the role of tax–benefit policies in mitigating the immediate impact of the economic shocks. Our results show a dramatic increase in income poverty and inequality between December 2019 and June 2020. The poverty rate, measured with the national poverty line, goes up from 25.7 to 58.2 per cent over this period and extreme poverty increases from 9.2 to 38.6 per cent. Inequality measured by the Gini coefficient increases substantially from 0.461 to 0.592. On average, household disposable income drops by 41 per cent. The new Family Protection Grant provides income protection for the poorest income decile. However, overall tax–benefit policies do little to mitigate the losses in household incomes due to the pandemic.

FPI Journal of Economics and Governance

Muniyandi Balasubramanian

This paper describes the value of ecosystem goods and services provided by three protected areas (BiligiriRangaswamy Wildlife Sanctuary, Nagarahole National Park, Bannerghatta National Park) in the Western Ghats region in Karnataka, using both primary and secondary data, and analyse their implications for construction of a System of Environmental Economic Accounts (SEEA). Primary data is used for estimation of economic value of ecosystem services such as provisioning services through a survey of 148 soliga tribal households who are engaged in collection of Non-timber Forest Products. Secondary data is used for valuation of carbon sequestration and soil prevention. Further, the value of recreational services is estimated by Individual Travel Cost Method for three protected of 425 tourist visitors. The main results show that (a) the estimated total economic value of forest ecosystem services is about Rs138.4 million from the three protected areas in Karnataka; and (b) the recreation services have the highest value among the other ecosystem services followed by carbon sequestration, soil erosion and provisioning ecosystem services. These results are useful to support for a policy and decision-making related to the better environmental and natural resource management at the local level and integrating ecosystem services into the state and national income accounts for achieving, among others, the UN-SDGs as they are related to the Goal 1 (No poverty), Goal 2 (Zero hunger), Goal 3 (Good health and well-being), Goal 6 (Clean water) and Goal 13 (Climate action) in Karnataka State.

CEB Working

isabelle guérin

This article focuses on the consequences of the Indian lockdown in terms of debt. It is based on an ongoing study in a rural area of Tamil Nadu, South India. It draws on a long-term knowledge of this region, longitudinal quantitative household survey data on employment, debt and assets (2010-2016/17) as well as qualitative surveys conducted by telephone since the beginning of the lockdown in March 2020. Our results show: (i) the drying up of part of farm income and the bulk of off-farm income; (ii) the limited role of cash saving and cash transfers; (iii) the debt burden, since the population has faced massive debt growth over the past decade and some households are already very financially fragile; (iv) a predominance of informal finance with, however, a rise in finance; (v) a suspension of repayments, including for most informal lenders; (vi) a halt to unsecured debt and an erosion of the trust that cements most transactions; (vii) finally, the emergence of new forms of secured debt that threaten household assets. The sharp rise in debt observed over the last decade is the result of a widening of credit opportunities, partly formal but mostly informal. These have been made possible by building new relationships of trust but also of confidence in the future, based on strong economic growth that was believed to be sustainable. The lockdown highlights the fragility of these dynamics. For the poorest (mostly, but not only, Dalits), neither the state nor intra-caste or kinship solidarity are sufficient as a safety net. Impoverishment and a return to old forms of dependency seem to be the only way out.

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