Top 0.1% Indians' wealth grew 3,000% since '80s, bottom half's by only 107%

Income inequality in India has reached historically high levels as the top 0.1 per cent of earners increased their total wealth at a rate many times higher than the bottom 50 per cent did, shows a new study by the World Inequality Lab.

Putting various economic growth policies under a question mark, new research from the World Inequality Lab said Indian economic inequality has increased rapidly since the 1980s.

Providing comparative region- and country-wise (China, Europe, India, Russia, and North America) figures for total cumulative real growth per adult between 1980 and 2016, the report, titled 'World Inequality Report 2018', shows which section of the population accounted for how much of this growth.

 

"In China, the bottom 50 per cent earners grew at less than 420 per cent while the top 0.001 per cent grew at more than 3,750 per cent. The gap between the bottom 50 per cent and the top 0.001 per cent is even more important in India (less than 110 per cent versus more than 3,000 per cent)," the report said. 

Further, providing figures for the share of growth per adult captured by each group, the report said: "At the global level, the top 1% captured 27% of total growth—that is, twice as much as the share of growth captured by the bottom 50%. The top 0.1% captured about as much growth as the bottom half of the world population." 

 

In fact, according to the report, India fared better at combating inequality in the first 30 years after the country's independence than it did from the 1980s onwards even as the economy underwent liberalisation and the country embraced globalisation. 

Citing a working paper, titled 'Indian Income Inequality, 1922–2014: From British Raj to Billionaire Raj?', which was authored by Lucas Chancel and Thomas Piketty in 2017, it said inequality in India has risen substantially since the 1980s following "profound transformations in an economy that centred on the implementation of deregulation and opening-up reforms".

The report's chapter on income inequality in India said: 

1) Income inequality in India has reached historically high levels. 

2) In 2014, the share of national income accruing to India's top one per cent of earners was 22 per cent, while the share of the top 10 per cent was around 56 per cent.

 

 

3) Since the beginning of deregulation policies in the 1980s, the top 0.1 per cent earners have captured more growth than all of those in the bottom 50 per cent combined. The middle 40 per cent have also seen relatively little growth in their incomes.

4) Inequality has risen substantially from the 1980s onwards, following profound transformations in the economy that centred on the implementation of deregulation and opening-up reforms.

5) This rising inequality trend is in contrast to the thirty years that followed the country’s independence in 1947, when income inequality was widely reduced and the incomes of the bottom 50 per cent grew at a faster rate than the national average.

"The fact that inequality trends vary so greatly among countries, even when countries share similar levels of development, highlights the important role of national policies in shaping inequality. For instance, consider China and India since 1980: China recorded much higher growth rates with significantly lower inequality levels than India. The positive conclusion of the World Inequality Report is that policy matters a lot," Chancel, general coordinator of the report, was quoted as saying by news agency IANS. 

"For the first time ever, this report examines how global growth has been shared among individuals in the entire world since the 1980s, with a particular focus on emerging countries where inequality data had previously been sparse or nonexistent," Piketty, coordinator of the report, was quoted as saying by the same news agency. 

The report was coordinated by economists Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez and Gabriel Zucman and shows unequal impacts of globalisation over past 40 years.

The research relies on the most extensive database on the historical evolution of income and wealth inequality. It aims to contribute to a more informed global democratic debate on economic inequality by bringing the most up-to-date and comprehensive data to the public discussion.
With input from agencies

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel