Context:

Data on India for a century has revealed income and wealth inequality now as being worse than during British colonial rule, according to the World Inequality Lab.

World Inequality Lab (WIL)

• The WIL is a Paris based global research center focused on the study of inequality and public policies that promote social, economic and environmental justice.
• The WIL hosts and maintains the World Inequality Database (WID), the most comprehensive open-access database on global inequality dynamics.
• WID includes data on the evolution of income and wealth distribution, as well as gender and environmental inequality.
• The WIL has released a paper out on the state of inequality in India, titled, Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj.
• The report has analysed the data between 1922 and 2022, a century of data on incomes and wealth.
• Findings – By 2022-23, top 1% income and wealth shares (22.6% and 40.1%) are at their highest historical levels.
• India’s top 1% income share is among the very highest in the world, higher than even South Africa, Brazil and US.
• Billionaire raj – It says the ‘billionaire raj’ is now more unequal than the British colonial raj.
• Billionaire raj is the term used to define the post – 2010s rapid rise of billionaires in the country.
• It makes two other observations, one on income tax being regressive, and the other being the poor economic data, which has seen a decline recently.
• Inequality has been rising sharply in India since the 1980s, between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration.

Key Takeaways

• Inequality – 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.
• 2014-15 & 2022-23 – 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.
• India’s top 1% income share is among the very highest in the world, higher than even South Africa, Brazil and US.

• Income Tax – 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.
• Super Tax – 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.
• Super tax serves as a tool to fight inequality.

Read Also: Reasons for Inequality in India