World Inequality Lab Report
A new report by World Inequality Lab titled "Income and Wealth Inequality in India, 1922-2023" highlights a significant rise in both income and wealth inequality in India.
Income Inequality
The top 1% of earners in India now hold the highest share of national income (22.6%) in the last 100 years.
The top 0.1% of the population corner nearly 10% of the national income.
This share of the top 1% is among the highest in the world.
Wealth Inequality
The share of the top 1% in wealth is also at its peak since 1961 (40.1%).
The share of wealth among the top 10% has significantly increased from 45% in 1961 to 65% in 2022-23.
Conversely, the bottom 50% and middle 40% of the population hold a declining share of wealth.
Comparison with Other Countries
While India's wealth inequality isn't as extreme as Brazil and South Africa, it has grown rapidly since the 1980s.
India's income inequality is worse than these countries and even the US.
Impact on Growth and Development
The report argues that this rising inequality hinders economic growth and poverty reduction.
It compares India with China and Vietnam, where growth was more inclusive due to lower inequality.
Historical Trends
Inequality in India declined between 1960 and 1980 but worsened with economic reforms in the 1990s.
Human Development and State-wise Disparity
The report finds a correlation between high human development and sustained economic growth in states like Kerala and Tamil Nadu.
States with lower human development rankings (like Bihar) have experienced slower economic growth.
India's overall Human Development Index ranking is lower than its economic ranking, indicating economic growth hasn't translated into better human development.
Policy Recommendations
The report emphasizes prioritizing human development (education, healthcare) for inclusive and sustainable economic growth.
It criticizes free foodgrain schemes, arguing that handouts alone can't address deep inequality.
The report warns of potential social unrest if inequality remains unaddressed.
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