World Inequality Report 2026

WHY IS IT IN NEWS?

• The World Inequality Report 2026, led by economists Lucas Chancel, Ricardo Gómez-Carrero, Ravaida Mushrif, and Thomas Piketty, reveals that India’s income inequality is among the highest in the world.
• The top 10% of earners capture 58% of national income, while the bottom 50% receive only 15%.
• Wealth inequality is even sharper: the top 1% owns 40% of total wealth, and the bottom 50% owns just 6%.
• The findings mark a continued rise in inequality despite earlier improvements post-liberalisation.

Relevance

GS-III – Economy

• Income & wealth inequality trends
• Structural drivers: informality, labour markets, capital concentration
• Impact on growth quality, consumption demand, productivity
• Policy responses: taxation, social security, universal services

GS-II – Welfare & Governance

• Public service delivery gaps
• Social protection mechanisms for bottom 50%
• Fiscal policy design (wealth tax, inheritance tax debates)

WHAT IS THE WORLD INEQUALITY REPORT?

a) What is it?

• An annual global study by the World Inequality Lab, analysing distribution of income, wealth, gender inequality, and public vs private assets.

b) Why it matters?

• Provides country-wise comparable data.
• Influences global debates on taxation, welfare, job creation, and inequality.
• Uses multiple data sources: national accounts, tax data, household surveys.

KEY FINDINGS FOR INDIA (INCOME INEQUALITY)

a) Income Shares in 2024

• Top 10%: 58% of national income
• Middle 40%: 27%
• Bottom 50%: 15%

b) Historical trend

• Inequality fell after Independence → lowest in 1980s
• Rose sharply after 1991 liberalisation
• Since 2000s, India among world’s most unequal economies

c) Comparison with 2023

• Top 10% share: rose from 57% → 58%
• Bottom 50% share: marginal improvement from 13% → 15%

WHY INEQUALITY IS WORSENING

A) Structural economic factors

• High informality in labour markets → low wages
• Unequal access to education & health
• Skill-biased growth favouring tech-intensive sectors
• Concentration of corporate power and private capital
• Regional disparities (South & West more developed than North-Central regions)

B) Wealth concentration mechanisms

• Rising property prices
• High returns on capital vs wages
• Growth of billionaire wealth → tripled in 10 years
• Limited inheritance taxation or wealth taxes

C) Labour market outcomes

• Women earn only 64% of what men earn for equal work
• Unpaid labour and care burden remain high
• Agricultural wages remain stagnant despite growth in service economy

GLOBAL CONTEXT

• Inequality reduced in Asia, Europe, North America during 20th century, but:
  • Since 1980, 40% of global wealth growth captured by the top 1%
  • India mirrors global trend but with more extreme concentration

Geography of inequality (report highlights)

• High inequality regions:
  • Middle East & North Africa
  • Latin America
  • India
  • Sub-Saharan Africa
• Low inequality regions:
  • Europe
  • East Asia (Japan, South Korea)

SOCIAL & ECONOMIC CONSEQUENCES FOR INDIA

A) Economic growth quality

• High inequality → reduces consumption demand
• Limits human capital formation
• Weakens long-term growth sustainability

B) Social impacts

• Reduced social mobility
• Intergenerational inequality
• Increased risk of social tension
• Gender disparity persists

C) Policy impacts

• Public investments (health, education, skilling) face pressure
• Widening gap between urban digital economy and rural informal economy

POLICY DEBATES RAISED BY THE REPORT

Possible interventions (as per global best practices):

1. Progressive taxation
   1. Wealth tax or inheritance tax
   2. Stronger taxation on capital gains & high-income groups
2. Universal basic services
   1. Health, education, childcare reforms
   2. Social security for informal workers
3. Labour market reforms
   1. Higher minimum wages
   2. Strengthening collective bargaining
4. Gender-focused interventions
   1. Reducing unpaid labour burden
   2. Ensuring equal pay structures
5. Regional balancing
   1. Targeted investment in backward districts
   2. Rural infrastructure & skilling

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