Context:
According to a paper released by the World Inequality Lab, the shares of income and wealth of India’s top 1% at 22.6% and 40.1% respectively is at their highest historical levels in 2022-23.
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- World Inequality Lab (WIL): An Overview
- Key Recommendations from the “Billionaire Raj” Working Paper
World Inequality Lab (WIL): An Overview
- Establishment and Location: The World Inequality Lab (WIL) is housed within the Paris School of Economics.
- Objective: The primary objective of WIL is to foster research on the dynamics of global inequality.
- Collaboration: WIL collaborates with an extensive international network comprising over a hundred researchers spanning nearly seventy countries to maintain and update its database.
Key Findings from WIL’s Working Paper: “Billionaire Raj”
- Authors: The working paper titled “Billionaire Raj” was authored by Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi.
- Inequality in India: The paper posits that India’s current level of inequality surpasses that observed during the British colonial era.
Income and Wealth Inequality:
- In the fiscal year 2022-23, the share of income and wealth held by the top 1% in India reached unprecedented levels: 22.6% and 40.1%, respectively.
- India’s top 1% income share ranks among the highest globally, surpassing even countries like South Africa, Brazil, and the US. However, in terms of wealth share, India lags behind South Africa and Brazil.
Disparity Among Income Groups:
- The top 1% of income earners in India possess an average wealth of Rs 5.4 crore, which is 40 times the national average.
- In contrast, the bottom 50% and the middle 40% of the population hold significantly lower amounts of wealth, with averages of Rs 1.7 lakh (0.1 times the national average) and Rs 9.6 lakh (0.7 times the national average), respectively.
Ultra-Wealthy in India:
- The wealthiest segment, approximately 10,000 individuals out of 92 million Indian adults, boasts an average wealth of Rs 2,260 crore. This staggering figure is 16,763 times the national average wealth.
Key Recommendations from the “Billionaire Raj” Working Paper
Data Sources:
- The paper utilized various sources to construct its estimates on income and wealth inequality in India.
- Notably, India lacks official income estimates and relies on survey-based official statistics for wealth, which may not provide a comprehensive view.
Policy Measures to Address Inequality:
- Tax Restructuring: The paper advocates for a restructured tax code that addresses both income and wealth. This could potentially help in redistributing wealth more equitably.
- Public Investments: Broad-based investments in crucial sectors such as health, education, and nutrition are recommended. Such investments can play a pivotal role in reducing inequality by providing opportunities and improving the living standards of the less privileged.
Proposal for a “Super Tax”:
- A suggested “super tax” of 2% on the net wealth of the 167 wealthiest families for the fiscal year 2022-23 could yield revenues equivalent to 0.5% of the national income.
- This tax proposal not only offers a potential revenue stream but also aims to create fiscal room for essential public investments.
- Implementing such a tax could act as an effective tool in combating the rising inequality in India by redistributing wealth and ensuring a fairer distribution of resources.
-Source: Indian Express
