AMN / WEB DESK
A new study has revealed that inequality in India has jumped since early 2000s, with the income and wealth share of top 1 per cent population rising to 22.6 per cent and 40.1 per cent, respectively, in 2022-23.
According to a working paper titled ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj’ said between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration.
Given its geographic size and population, now the largest in the world, the distribution of economic growth in India has significant implications for global inequality dynamics. This underscores the importance of accurately measuring income and wealth inequality in India.
In this paper, Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi combine national income accounts, wealth aggregates, tax tabulations, rich lists, and surveys on income, consumption, and wealth in a consistent framework to present long run homogeneous series of income and wealth inequality in India.
Key findings:
- Inequality declined post-independence till the early 1980s, after which it began rising and has skyrocketed since the early 2000s. Trends of top income and wealth shares track each other over the entire period of the study.
- Between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration. By 2022-23, top 1% income and wealth shares (22.6% and 40.1%) are at their highest historical levels and India’s top 1% income share is among the very highest in the world, higher than even South Africa, Brazil and US.
- In line with earlier work, the paper finds suggestive evidence that the Indian income tax system might be regressive when viewed from the lens of net wealth.
- A restructuring of the tax code to account for both income and wealth, and broad-based public investments in health, education and nutrition are needed to enable the average Indian, and not just the elites, to meaningfully benefit from the ongoing wave of globalization. Besides serving as a tool to fight inequality, a “super tax” of 2% on the net wealth of the 167 wealthiest families in 2022-23 would yield 0.5% of national income in revenues and create valuable fiscal space to facilitate such investments.
- The paper emphasizes that the quality of economic data in India is notably poor and has seen a decline recently. It is therefore likely that these new estimates represent a lower bound to actual inequality levels.