The top 1% of Indians earns 22.6% of the national income and holds 40.1% of the wealth. This inequality is among the worst in the world, finds a recent study.
This ‘Billionaire Raj’ has been pronounced since Narendra Modi came to power, the report said, and is founded on “an authoritarian government with centralisation of decision-making power, coupled with a growing nexus between big business and government”. There is an urgent need to redistribute wealth through a reform of the tax code, a ‘super tax’ on the richest Indians and massive social investments.
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[00:00:03] Hello and welcome to All Indians Matter, I am Ashraf Engineer.
[00:00:22] A recent study by the World Inequality Lab said that income inequality in India is now
[00:00:26] among the highest in the world, worse than in the US, Brazil and South Africa.
[00:00:31] Although gaping is the gulf between the rich and the poor, the report said that income
[00:00:34] distribution was in fact more equitable during the British Raj.
[00:00:38] The study said and I quote, the billionaire Raj headed by India's modern bourgeoisie
[00:00:42] is now more unequal than the British Raj headed by the colonialist forces.
[00:00:48] Consider this, the top 1% of Indians earns 22.6% of the national income, the bottom
[00:00:53] 50% earns a mere 15% according to the study.
[00:00:57] The top 1% also hold 40.1% of the wealth.
[00:01:02] As of now, India has 271 billionaires with 94 added in 2023 alone according to the
[00:01:08] Hurun Research Institute's 2024 global rich list.
[00:01:11] That's more than in any country other than the US.
[00:01:15] Income here refers to the sum of earnings, interest on savings, investments and other
[00:01:19] sources.
[00:01:20] Wealth is the total value of assets owned by the individual.
[00:01:33] In 2014, Narendra Modi was elected at least on the face of it with a mandate for economic
[00:01:37] reforms.
[00:01:38] However, his two terms have been marked by a widening gulf between the rich and
[00:01:42] the poor.
[00:01:43] The Congress which leads the opposition has repeatedly pointed to Modi's proximity
[00:01:47] to the mega-rich especially industrialist Gautam Adani.
[00:01:50] The widening rich-poor gap is especially stark when you consider that India has
[00:01:54] been growing in the 8% range.
[00:01:56] In fact, India could surpass Japan and Germany to become the world's third largest
[00:02:00] economy by 2027.
[00:02:02] The World Inequality Lab found that the rise in inequality has been particularly
[00:02:06] pronounced since Modi and his Bhatia Janata Party came to power in 2014.
[00:02:11] The report said that the reforms implemented have led to an
[00:02:14] authoritarian government with centralization of decision-making power coupled
[00:02:19] with a growing nexus between big business and government.
[00:02:23] Its findings can be categorized under five key heads.
[00:02:26] One, inequality declined after independence till the early 1980s after which it began
[00:02:31] rising.
[00:02:32] The second, inequality has been
[00:02:34] restored since the early 2000s.
[00:02:36] Two, between 2014-15 and 2022-23 wealth concentration has become pronounced.
[00:02:40] By 2022-23 the top 1% income and wealth shares were at historic levels.
[00:02:45] Three, there is evidence that the income tax system is regressive when viewed through
[00:02:49] the lens of net wealth.
[00:02:51] Four, there is a need to rethink the tax code to account for income and
[00:02:54] wealth.
[00:02:55] Investment in health, education and nutrition is needed to benefit the
[00:02:58] average Indian.
[00:03:00] Five, the quality of economic data in India is poor and is declining.
[00:03:04] So for all you know, the gap may be even wider than we think.
[00:03:08] This government has glibly rejected any independent assessment of facts that
[00:03:11] show it in poor light.
[00:03:13] These range from doubts about its economic performance to the state of
[00:03:16] India's democracy even as it chooses to not release data that would be
[00:03:20] uncomfortable for it.
[00:03:22] In fact, India's GDP numbers themselves have been challenged by
[00:03:25] economists.
[00:03:26] For example, former chief economic advisor Arvind Subramanian was
[00:03:29] surprised that the GDP rate is seen to be rising.
[00:03:32] India also chose to skip the census for the first time in 140 years,
[00:03:36] citing the COVID-19 pandemic.
[00:03:38] But that was years ago and there is no sign of the
[00:03:40] census yet.
[00:03:42] India has also challenged the World Health Organization claim that
[00:03:44] COVID debts were underestimated by a factor of 10 in the country.
[00:03:49] Why is there such a wealth gap?
[00:03:50] You could blame it on a number of factors.
[00:03:52] For instance, globalisation and an increasingly digital world have
[00:03:56] created great opportunities for some sections while others have been
[00:03:59] left behind.
[00:04:00] What typically happens in such a situation is that the owners of
[00:04:03] capital keep getting richer.
[00:04:05] The International Labour Organization's data says that in Asia-Pacific,
[00:04:08] labour has a lower income share than the world average.
[00:04:11] This means that workers have less to save and invest further
[00:04:14] worsening inequality.
[00:04:16] The informal sector is the most vulnerable, especially women.
[00:04:19] Another factor is corruption, pro-rich tax policies and the lack of
[00:04:23] social safety nets.
[00:04:24] In India, between 2000 and 2022, per capita income rose from $442 to $2,389.
[00:04:32] Between 2004 and 2019, the poverty rate fell from 40% to 10%.
[00:04:38] Despite this, poverty is concentrated in states that are home to 45% of
[00:04:42] India's population but contain 62% of its poor.
[00:04:46] There are many who live just above the poverty line.
[00:04:48] These people are at risk of falling back into poverty.
[00:04:52] Several factors, such as the lack of education, have trapped many in
[00:04:55] low-paid jobs and depressed the growth of the bottom 50% and the
[00:04:59] middle 40% of Indians.
[00:05:01] The inequality calls for a change in tax policies for wealth
[00:05:04] redistribution.
[00:05:05] According to the World Inequality Lab study, the income tax system
[00:05:09] needs an overhaul.
[00:05:10] The report said, and I quote,
[00:05:22] a quote-unquote super tax of 2% on the net wealth of the 167 wealthiest
[00:05:29] families in 2020-23 would yield 0.5% of national income and revenue
[00:05:34] and provide a fund for social investments.
[00:05:37] The average Indian won't gain from a modernizing and globalizing
[00:05:40] economy unless there is an effective redistribution of wealth and the
[00:05:43] investments I detailed above are made.
[00:05:46] Without it, the slide towards an oligarchy will pick up speed.
[00:05:49] India was once the template for newly free countries who based their
[00:05:52] policies and institutions on ours.
[00:05:55] Not anymore.