The wealth and income are inordinately concentrated at the top
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India has achieved high economic growth in the last few decades. It has impressed the world and instilled a greater sense of self-worth and confidence among the people. It has propelled the country to the position of the fifth largest economic power in the world. But there is a devil in the details and that should cause deep discomfort to the country. The growth has been very unequal and India now has a highly iniquitous society. The wealth and income are inordinately concentrated at the top, with 1% of the population owning as much as 40.1% of the wealth and accounting for 22.6% of income in 2022-23. This data was provided by a working paper titled ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj,’ authored by four economists of the World Inequality Lab, a global research centre. It says India’s income inequality is ‘among the highest in the world’.
The paper makes the shocking observation that inequality in India now is worse than during the British raj and is at it highest level in history. This raises uncomfortable questions about the country’s economic strategies. It has to be seen in a political context also. Democracy is based on the idea that everyone is equal and its practice was expected to gradually reduce social and economic equality. But the data shows that inequality has increased over the years. It declined in the immediate post-Independence period but has risen in recent years. The rise of ‘top-end inequality’ has been particularly pronounced between 2014-15 and 2022-23. The rich are getting richer, and the gap is widening faster than ever before. ‘Sabka saath, sabka vikas’ remains a slogan, with the vikas increasingly favouring the few. Even when there are claims that millions of people were lifted out of poverty, more and more wealth was moving to the top.
Increasing inequality leads to social strife and economic and political disruptions and even upheavals. In their attempts to keep strife and unrest under control, governments become more authoritarian. This may already be happening. The report has suggested that the tax system should be restructured for better wealth and income distribution. It has said that a super tax of 2% on 167 wealthiest families would yield 0.5 per cent of national income, which could be used for investments that help to reduce inequality. It has recommended more broad-based public investments in health, education and nutrition, which will enable ordinary people to benefit from globalisation. More than anything else, economic growth should have employment generation and poverty reduction as its focus.