Syllabus: GS-III, Subject: Economy, Topic: Growth and Development, Inclusion, Issue: Inequality
Context: Research paper “Income and Wealth Inequality in India, 1922-2023” released by World Inequality lab.
Key findings:
- Emergence of High Net worth Individuals: The number of individuals with net wealth exceeding $1 billion rose from 1 in 1991 to 162 in 2022.
- Tax Filing Expansion: Share of adults filing income tax returns increased from under 1% till the 1990s to around 9% in 2017-2020.
- Income Concentration: In 2022-23, 22.6% of India’s national income went to the top 1%, surpassing levels seen during the colonial period.
- Wealth Concentration: Extreme wealth concentration at the top tripled from 1961 to 2023, with significant gains post-1991 reforms.
- Global Comparison: India’s income share of the top 1% is among the highest globally, while wealth inequality ranks in the middle compared to other nations.
- Data Quality Issues: Poor data quality in India likely leads to underestimation of actual inequality levels.
Proposed solutions:
- A “super tax” of 2% on billionaires, multimillionaires, and restructuring the tax schedule to address rising inequalities.
