The Paris-based World Inequality Lab on March 19, 2024 released data about India’s income and wealth inequality from 1922 to 2023 in a Working Paper (N°2024/09) “Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj”.
The authors are ∗ Nitin Kumar Bharti1 , Lucas Chancel2 , Thomas Piketty3 , and Anmol Somanchi3 1 New York University, Abu Dhabi and World Inequality Lab 2 Sciences Po, Harvard Kennedy School and World Inequality Lab 3 Paris School of Economics and World Inequality Lab.
Analysis of the century long data on India reveals rising wealth inequality. And, inequality declined after independence (1947) till the 80s and surged later and skyrocketed after 2000. The authors propose a 2% “super tax” on net wealth of the wealthiest 167 families in 2022-23 could yield 0.5% of national income in revenues and create valuable fiscal space to facilitate such investments to fight inequality.
In this paper, the authors 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.
Response from the Indian Government is awaited and will be added here as and when it is available.
Source- All information in the above report is from https://inequalitylab.world/en/news/
The statements, views and opinions expressed in this article/report/video/viewpoint/opinion are solely those of the authors and do not necessarily represent the editorial policies of the South Asia Times (SAT).
