India's top 1% owns 40% wealth as income inequality touches historic high: Study
The study points out that between 2014-15 and 2022-23, there has been a huge increase in wealth concentration, particularly at the top end.
Since the early 2000s, wealth inequality in India has surged dramatically. A working paper reveals that the income share of the top 1 per cent has soared to 22.6 per cent, while their wealth share has reached 40.1 per cent in 2022-23.
The 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.
The paper authored by Thomas Piketty (Paris School of Economics and World Inequality Lab), Lucas Chancel (Harvard Kennedy School and World Inequality Lab) and Nitin Kumar Bharti (New York University and World Inequality Lab).
"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 per cent income and wealth shares (22.6 per cent and 40.1 per cent) are at their highest historical levels and India's top 1 per cent income share is among the very highest in the world, higher than even South Africa, Brazil, and the US," the paper said.
Tax system regressive
According to the paper, 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 globalisation," it noted.
As per the paper, besides serving as a tool to fight inequality, a "super tax" of 2 per cent on the net wealth of the 167 wealthiest families in 2022-23 would yield 0.5 per cent of national income in revenues and create valuable fiscal space to facilitate such investments.
The paper said the quality of economic data in India is notably poor and has seen a decline recently.
It said India's top 1 per cent population's income share appears to be among the highest in the world "behind only perhaps Peru, Yemen and a couple of other small countries".
"In terms of top wealth shares, we see that both with top 10 per cent and top 1 per cent, India comes out in the middle of the pack, with Brazil, and South Africa standing out with their extreme wealth concentration levels (85.6 per cent and 79.7 per cent top 10 per cent shares, respectively)," the paper said.
The paper pointed out that from 13 per cent in 1922, the top 1 per cent income share increased significantly to over 20 per cent in the inter-war period.
While they experienced a dramatic fall after that, during the 1940s to fall back to 13 per by the time of India's Independence, the paper said after briefly rising during the 1950s, the top 1 per cent income shares consistently fell over the next two decades and reached 6.1 per cent by 1982.
Socialist policy
This was likely the consequence of the broadly socialist policy agenda pursued by the Indian government till the 1980s, it noted.
Since the early-1980s, according to the paper, when the Indian government began initiating a broad range of economic reforms, leading up to the liberalisation in 1991, the decline in top 1 per cent income shares halted.
Early-1990s onwards, the paper said the top 1 per cent income shares have consistently increased over the next 30 years to reach an all-time high of 22.6 per cent in 2022.
While the paper's wealth inequality series spans the period 1961-2023, the availability of tax tabulations going back to 1922 when the Income Tax Act was enacted by the British administration, allowed the authors to study the evolution of the top 1 per cent income share over an entire century.
(With agency inputs)
