India’s Wealth Inequality: Top 1% Owns 40% of Wealth

New Delhi: The concentration of wealth among India’s richest 1% is now the highest in six decades, with their income percentage surpassing that of countries like Brazil and the United States, according to the World Inequality Lab. By the end of 2023, the wealthiest Indians owned 40.1% of the nation’s wealth, a peak not seen since 1961. Their share of total income reached 22.6%, the highest since 1922, the study reported.

Since gaining independence from Britain in 1947, India opened its markets to foreign investment in 1992, resulting in a surge in billionaires. The study titled “Income and Wealth Inequality in India 1922-2023: The Rise of the Billionaire Raj” highlights that wealth concentration at the top end has increased significantly, especially between 2014-15 and 2022-23.

By 2022-23, the top 1% of income and wealth shares reached 22.6% and 40.1%, respectively, marking their highest historical levels. India’s top 1% income share ranks among the highest globally, surpassing even South Africa, Brazil, and the US. The study suggests that India’s income tax system, including a proposed “super tax” of 2% on the net wealth of the 167 richest families, could generate 0.5% of national income in revenues, providing fiscal space for critical investments.

Despite economic growth, the study notes that India’s economic data quality has declined, affecting the accuracy of wealth and income distribution figures. The top 1% income share in India is among the highest worldwide, just behind countries like Peru and Yemen. The study also points out that a lack of education has kept many Indians in low-paid jobs, hindering the financial growth of the bottom 50% and the middle 40%.

Since Prime Minister Narendra Modi’s election in 2014 on a development and economic reform mandate, critics argue that the wealth gap between the rich and rural poor has widened. India’s economy grew at 8.4%, its fastest in a year and a half, in the last quarter of 2023. The opposition party Congress has criticized Modi’s government’s close ties with billionaires, raising concerns ahead of the national elections starting April 16.

The World Inequality Lab’s findings emphasize the need for policy interventions to address the growing disparity, suggesting that targeted financial measures could help mitigate the widening wealth gap in India.