Income and Wealth Inequality in India : GS-1 Mains
Short notes or Micro Notes
Question : Analyze the factors contributing to extreme inequality and evaluate the suggestions put forth to address this issue
Source: World Inequality Lab report “Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj”
Key Findings:
- Average Income Growth: 2.6% per year (real terms) between 1960 and 2022.
- Rise of Billionaires: From 1 in 1991 to 162 in 2022 (very high net worth individuals with over $1 billion).
- Increase in Income Tax Payers: From under 1% pre-1990s to 9% of adults (2017-2020).
- Extreme Inequality:
- Top 1% income share: 22.6% in 2022-23 (highest since 1922, higher than US, South Africa, Brazil).
- Top 1% wealth share: 40.1% in 2022-23 (highest since 1961, higher than US, China).
- Potential Underestimation: Poor quality economic data might mask even higher inequality.
Possible Factors:
- Regressive tax system (might favor wealthy).
- Lack of education trapping people in low-paid jobs.
- Surge in foreign investment post-1992.
Suggestions:
- Super tax on billionaires and multi-millionaires.
- Restructured tax including wealth for social investments (education, healthcare, infrastructure).
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