A recent survey released by the World Inequality Lab has unveiled alarming statistics regarding India's wealth distribution. According to the report, in the fiscal year 2022-23, the top 1 per cent of India's population held a staggering 22.6 per cent of the country's income and a whopping 40.1 per cent of its wealth, surpassing even developed economies like the US.
Co-authored by prominent economists Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi, the paper, titled "Billionaire Raj," asserts that India has now reached unprecedented levels of inequality, surpassing even the disparity during the British colonial era.
Stark Reversal in India's Wealth Distribution Trends
The report highlights a stark reversal in India's wealth distribution trends since the post-independence era, noting a decline in income and wealth gaps until the early 1980s, followed by a sharp rise, particularly since the early 2000s.
Between 2014-15 and 2022-23, the concentration of wealth at the top end has seen significant escalation, raising concerns over the effectiveness of India's taxation system. The paper suggests that the Indian income tax system may be regressive in terms of net wealth.
Restructuring of Tax Code
To address these disparities, the authors propose a restructuring of the tax code to encompass both income and wealth, alongside broad-based public investments in crucial sectors such as health, education, and nutrition. They advocate for the implementation of a "super tax" of 2 per cent on the net wealth of the 167 wealthiest families in 2022-23, estimating that it could generate 0.5 per cent of national income in revenues and create fiscal space for essential investments while combating inequality.
The implications of India's soaring inequality extend beyond its borders, given the country's vast population. The paper underscores the significant impact these disparities will have on global dynamics.
Top 10% Saw Their Share of National Income Surge from 40%
In terms of income distribution, the paper reveals that the top 10 per cent of earners saw their share of the national income surge from 40 per cent at independence to a staggering 60 per cent in 2022. Conversely, the bottom 50 per cent of the population held a mere 15 per cent of the national wealth during the same period.
Contrasts Among Different Income Groups
Highlighting the stark contrasts among different income groups, the paper reveals that the top 1 per cent of Indians possess an average wealth of Rs 5.4 crore, a staggering 40 times more than the national average. Meanwhile, the bottom 50 per cent and the middle 40 per cent hold wealth equivalent to 0.1 and 0.7 times the national average, respectively. At the apex of the wealth distribution, approximately 10,000 individuals out of 92 million Indian adults boast an average wealth of Rs 2,260 crore, a staggering 16,763 times the national average.