According to the ‘World Inequality Report 2022’, India is among the most unequal countries in the world. Here there is rising poverty and an ‘affluent elite.’
The report highlights that the top 10% and top 1% in India hold 57% and 22% of the total national income respectively. On the other hand, the bottom 50% share has gone down to 13%.
The report was authored by Lucas Chancel and coordinated by renowned economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman.
The average national income of the Indian adult population is Rs 2,04,200. Here, the bottom 50% of earns Rs 53,610 while the top 10% earns Rs 11,66,520, over 20 times more.
The report goes on to say that the quality of inequality data released by the government has seriously deteriorated. This has happened over the past 3 years & made it particularly difficult to assess recent inequality changes.
According to the report, there was a ‘secular decline’ in public wealth and a rise in private wealth. This was because of the outbreak of the coronavirus pandemic.
The report says that emerging economies like India and China experienced faster increases in private wealth than wealthy countries. This happened after they transitioned away from regulated economies. In India, particularly, private wealth went up from 290% in 1980 to 560% in 2020.
The report shows that the income inequality in India under the British colonial rule (1858-1947) was very high. There was a top 10% income share of around 50%. This, people can see if they go back in time. After independence, due to socialist-inspired five-year plans, this share came down to 35-40%.
Owing to poor post-Independence economic conditions, India embarked upon deregulation and loosening controls in the form of liberalization policies.
The report argues that these policies have led to one of the most extreme increases in income and wealth inequality observed in the world.
It says that while the top 1% has largely benefited from these economic reforms, the growth among low and middle-income groups has been relatively slow and poverty persists.
The average household wealth in India is around Rs 9,83,010. The report says that they can see the bottom 50% of the nation to own almost nothing, with an average wealth of Rs 66,280 or 6% of the total pie.
The middle class is relatively poor with an average wealth of Rs 7,23,930 or 29.5% of the total. The top 10% owns 65% of the total wealth, averaging Rs 63,54,070 and the top 1% owns 33%, averaging Rs 3,24,49,360.
In 2021, the wealthiest 10% of the population own 65% of total household wealth in India. Gender inequality in India is also considered on the higher end of the spectrum.
The share of female labor income share in India is equal to 18% which is significantly lower than the average in Asia (21%, excluding China) & is among the lowest in the world. Although, the number is slightly higher than the average share in the Middle East (15%). However, a significant increase has been observed since 1990 (+8 p.p.) but it has been insufficient to lift women’s labor income share to the regional average.