Indian Growing Income Inequality: from British Raj to Billionaire Raj (Important) (Download PDF)

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A new paper released by economists shows that share of India’s national income accruing to the top 1 percent income earners is now at its highest level since the creation of the Indian Income tax in 1922:

Chart of The Rich Get Richer

Chart of The Rich Get Richer

Chart of The Rich Get Richer

  • India’s richest one per cent now hold 58 per cent of the total wealth – higher than the global average of 50 per cent.

  • The top 1 percent of earners captured less than 21 percent of total income in the late 1930s, the income of 1 % dropped to 6 percent in early 1980s and then rose to 22 percent in 2017.

  • Income inequality reduced during the 1980s but soon after rose up again with post-2000 income growth substantially higher than in the previous decades

  • Average annual real income growth was below 2 % in the 1960 and 1970s but reached 2.5 percent in the 1980s and 2 percent in the 1990s. Since 2000s, it is 4.4 percent on average.

Comparison with Other Countries

  • However unequal growth dynamics not specific to India but is found in China, USA and France

  • India’s specifics are very worrying- with the highest gap between the growth of the top 1 percent and growth of the full population.

  • Bottom 50 percent of earners grew three times more slowly in China than in India, the middle 40 percent six times more slowly than China, but incomes at top have grown at a faster pace than in China

Other Data from India

  • 84 billionaires in India have a collective wealth of $248 billion same as the bottom 70 per cent population

  • CEO of India’s top IT firm earns 416 times the salary of a typical employee

  • Women form 60 per cent of the lowest paid wage labour

Rising Income Inequalities in the World: Building an Economy for 99 Percent

  • Total global wealth in 2017 was $255.7 trillion, of which about $6.5 trillion was held by billionaires, led by Bill Gates ( $75 billion), Amancio Ortega ( $67 billion), and Warren Buffett ( $60.8 billion).

  • Richest 1 per cent own more wealth than the rest of the planet.

  • The problem is worsening- over the next 20 years, 500 people will hand over $2.1 trillion to their heirs- sum larger than the GDP of India

  • Richest 10 per cent of the China, Indonesia, Laos, India, Bangladesh, and Sri Lanka have seen income increase by more than 15 per cent while poorest 10 per cent have seen their share of income fall by more than 15 per cent.

Plight of Women in India

  • Due to discrimination and involvement in low-pay sectors, women’s wages across Asia are only 70 - 90 per cent of men’s

  • Global Wage Report 2016 - 17 of the International Labour Organisation (ILO) states that India suffers from huge gender pay gap with the gap exceeding 30 per cent.

  • In India, women form 60 per cent of the lowest paid wage labour, but only 15 per cent of the highest wage-earners- Indian women are not only poorly represented at top, but also experience discrimination at the bottom.

  • With 40 per cent of the 400 million rural Indian women involved in agriculture are neither recognized as farmers nor own land- with limited access to government schemes and credit they have no means of increasing productivity.

  • World’s largest garment companies are often linked to cotton-spinning mills in India, which routinely use the forced labour of girls

Poor Spreading of Wealth

  • In US, billionaires chose to cash out of their businesses, and hence their wealth is distributed. In Asia however, especially in Singapore and India have a large number of multi-generational billionaires which will transfer wealth to their heirs in the next 20 years

  • In many parts of the world, corporations are maximizing returns to their shareholders again distributing the profits- in UK, 10 per cent of profits were returned to shareholders in 1970 and now 70 per cent. However, in India, the figure is lower, but growing rapidly. In India, profits have been rising for the 100 largest listed corporations and hence the share of net profits going to dividends is increasing steadily over the last decade, reaching 34 per cent in 2014 - 15.

- Published/Last Modified on: September 26, 2017

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