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India’s shocking income divide—charted

rich and poor
Reuters/Desmond Boylan
Inclusive growth?
By Nupur Anand
Published Last updated This article is more than 2 years old.

In the last few decades, the rich in India have been getting richer and the poor getting poorer.

In 2014, for instance, the wealth possessed by the top 0.1% of India’s earning population grew at a faster pace compared to that held by 50% of the remaining population, according to the World Inequality Report 2018, released on Dec. 14. “This rising inequality trend is in contrast to the 30 years that followed the country’s independence in 1947, when income inequality was widely reduced and the incomes of the bottom 50% grew at a faster rate than the national average,” the report said.

However, led by privatisation, liberalisation, and disinvestment of the public sector over the years, the scenario has changed dramatically, said the report based on a study by economists Facundo Alvaredo, Thomas Piketty, Lucas Chancel, Emmanuel Saez, and Gabriel Zucman. In fact, inequality in India may be at its highest level since 1922 when the country introduced the income tax.

World Inequality Report 2018

“The structural changes to the economy, along with changes in tax regulation, appear to have had significant impact on income inequality in India since the 1980s,” the report noted. This income divide continued through the 2000s, with the richest 10% of the adult population in the country controlling most of the national income by 2014. The bottom 50%, meanwhile, had control over only 16% of the country’s income.

The rise and the rise of a small pool of India’s uber rich population has worsened this divide. The ultra wealthy alone—comprising 1% of the country’s population—controlled about 23% of India’s total wealth in 2014. That’s almost four times the 6% of the riches they controlled in 1982-83.

World Inequality Report 2018

And it’s not India alone. Income inequality has been on the rise across the world, but the situation is particularly startling in regions such as the Middle East and countries like Brazil and India.

The following charts are instructive. The first shows the percentage of national wealth controlled by the top 10% of the population in 2016.

World Inequality Report 2018

The second illustrates the pace at which the wealth of this 10% of the population has been rising in proportion to the national income, furthering the wealth divide.

World Inequality Report 2018

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